It pays to be active and focused as an asset manager, study finds
Active asset managers with a sector focus have been backed to outperform peers by a new report.
Northill Capital found they have “significantly outperformed both generalist active asset managers and passive mandates across multiple asset classes over the past five years”.
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Researchers compared the average five-year performance of 2,004 active US equity strategists, with combined assets under management (AUM) of $3.9 trillion.
They found the most focused managers (in the top decile) generated average annualised gross outperformance of 116 basis points (bps) a year relative to their benchmark.
This compared with two bps for the average manager.
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Northill’s Jon Little said: “This report provides evidence of a persistent link between asset managers focused on one asset class and their success in delivering outperformance to investors.”
Ryan Sinnott, director of strategy and development at Northill, said: “Our findings show that focus tends to drive outperformance in multiple asset class disciplines; on average, focused active managers outperformed generalist active managers by an average 77 basis points per annum.”