We are pleased to release the Verus 2022 Active Management Environment, which can be accessed with the link below. Active manager dispersion has been very wide recently, as the pandemic-induced global recession and subsequent fast-paced recovery resulted in considerable economic divergence.

  • Global markets have delivered a strong recovery, as economic activity expanded, corporate earnings grew considerably, and investor optimism pushed risk asset prices higher. Wider active manager dispersion is apparent, along with volatile market conditions.
  • Our analysis continues to suggest that managers who took more risk than the benchmark were not necessarily compensated with additional return. In fact, in many asset classes there has been a negative relationship between risk and return. This risk-reward relationship may provide helpful context to investors throughout the selection process.
  • Tumultuous market and economic activity has amplified the consequences of active manager bets, and has allowed skilled managers to stand out. This suggests a greater potential payoff from successful active manager selection.

These dynamics have created interesting opportunities for active managers to show differentiated performance and deliver alpha to clients. We hope that the insights from this unique mathematical approach provide a deeper understanding of active manager behavior and assists investors in their in selection process. For first time readers, an introduction to this research and methodological details can be accessed by clicking here.

We look forward to discussing this research with you.