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  5. Active management and QE-distorted markets

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Active Management and QE-distorted markets

23-09-2019

Michael Cembalest

The era of central bank quantitative easing (QE) has coincided with a decline in the percentage of active equity managers outperforming their benchmarks. Challenges in the QE distortion era include the abnormal outperformance of bond proxy stocks, the worst performance for value vs growth in 70 years, a surge in stock-to-stock correlations and a spike in the percentage of market returns coming from a handful of stocks. Even so, more than 50% of managers have outperformed since 2014 in many non-US strategies and in US small cap, and there are very early signs that chronic value underperformance may be coming to an end. Our database of institutional equity managers includes 6,700 managers reporting performance since 1996 across 23 style categories, and whose current assets are roughly $12 trillion.

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