Active Management Boosts Investors in Turbulent Year

February 8, 2023

As the numbers from 2022 continue to roll in, it’s clear that active management helped investors navigate a turbulent market in 2022. A new Bloomberg Businessweek article explored fund performance and, so far, the early numbers show that active management can and does outperform in a challenging market environment.

One analysis from Strategas Securities found that 62% of active large-company “core” funds, which contain a mix of growth and value stocks, beat the market in 2022. That’s the highest percentage of such funds outperforming since 2005.

Meanwhile, an early analysis from SPIVA scorecard producer S&P Dow Jones Indices showed that almost half of a broader universe of large-cap active funds topped their benchmark in the first half of 2022.

The article argues that in volatile times like these, active management holds the edge.

“Essentially, the buildup to valuation bubbles favors passive, and the popping of those bubbles favors active,” says Scott Opsal, director of research for the Leuthold Group, an investment researcher.

Active Funds Helped During Broad Selloff

Active funds were able to withstand some of the broad selloff since many managers don’t hold the top 5 companies at the same weight as the S&P 500. They were also tilted toward value stocks.

In addition, Strategas notes that many stocks actually did quite well in 2022, they just weren’t the biggest and most popular ones. The research firm sees that environment persisting in 2023, giving stockpickers a better shot at outperforming.

“This development seems to affirm a favorite marketing line of fund companies: When times get tough, active management shines,” stated the Bloomberg article.