For five years, the story for investment managers has been of The Triumph of the Drones. Passive investment managers have dominated sales, far outstripping active asset managers. Exchange traded funds, still overwhelmingly passive vehicles, have made life even harder for active managers.
Meanwhile, active managers – whether working for regulated groups or for hedge funds – have not helped their cause by failing to beat their benchmark indices. Small wonder investors balk at paying their management fees. But now, active managers believe, it is time for the Revenge of the Stockpickers.
The excuse has been plain. The panic that followed the Lehman bankruptcy made everything fall at once. No chance to outperform there. But since then, the recovery has been wary, following a pattern of “risk on-risk off”. When macro conditions seem less alarming, risk assets rise together. When the global situation looks more threatening, generally because of political developments in the US or the eurozone, everything falls together.