Stock-Picking Strikes Back!

I wanted to highlight a few bits from this Bloomberg piece. Correlations within the S&P 500 have fallen from very high levels. At the same time, active managers have rebounded relative to their benchmarks.

But while the benchmark gauge churns, stocks within it have gotten more lively. A measure of 30-day realized correlation among S&P 500 constituents has eased 34 percent since reaching a four-year high in October 2015, according to data compiled by Bloomberg.

Active managers have reaped benefits. According to Bank of America Corp., the proportion of large-cap funds beating their benchmarks reached 58 percent in the third quarter, compared with 18 percent in first six months. That marked the best period since the second quarter of 2015, and the second-best since the start of 2009.

Among growth funds, 71 percent exceeded returns on the Russell 1000 Growth Index, while 63 percent of value investors beat their benchmark. It was the most since 2013 for both groups.


Fund managers are currently holding 5.8 percent of their portfolios in cash, the most since the period after the Sept. 11, 2001, terrorist attacks, according to a survey conducted by Bank of America Corp. The level was matched in July after the U.K. voted to leave the European Union.

Posted by on October 31st, 2016 at 3:16 pm

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