We are pleased to release the Verus 2021 Active Management Environment, which can be accessed with the link below. The past year has been one of extreme volatility and divergence in many respects, creating interesting opportunities for active managers to show differentiated performance and deliver alpha to clients. We hope the insights from this research will allow for a deeper understanding of active manager behavior and inform selection in the future. For first time readers, an introduction to this research and methodological details can be accessed by clicking here.
- Equity markets experienced significant volatility in early 2020 due to the COVID-19 global economic slowdown, and businesses were affected in very different ways. The large divide between winners and losers is evident. In this 2021 release, readers will notice much greater return dispersion across each equity universe.
- The global equity active management universe has been added to this year’s document. This addition is a reflection of our belief in the case for active global mandates, as well as increasing institutional demand.
- Most active universes in this analysis, during the timeframes examined, suggest that managers who took more risk than the benchmark were not compensated with additional return. Furthermore, in many asset classes there appeared to have been a negative relationship between risk and return (i.e. managers who chose to take more risk than their benchmark underperformed that benchmark).
- Dispersion in certain alternative asset classes, including REITs, picked up markedly, as not all sectors were impacted equally by the fallout from COVID-19. This dispersion appears to have created opportunities for managers to generate alpha.