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Passive to Active: Words of Wisdom from Ted Lasso
Friday 01 March 2024
Investment Talks
Passive to Active: Words of Wisdom from Ted Lasso
March 2024 | Passive strategies have generally have fared well over the past decade, which has made it easy to forget the long periods during which active managers outpaced passive approaches. The reasons we believe market concentration will decline include (1) a shrinking earnings advantage for the top ten companies, and (2) seemingly unsustainably high valuations. We believe investors may benefit from investing with active managers that thoughtfully select their exposure based on the earnings and valuation profile of each stock.
01 | Historically, there are have been two environments in which active US equity managers have outperformed: when index concentration has declined, and during bear markets.
02 | As a result of today’s exceedingly narrow market environment, S&P 500 Index concentration in the top five stocks has reached an all-time high.
03 | We believe US equities appear priced to perfection from a valuation perspective. Given active managers’ track records of outperforming during bear markets, this may be a good time to switch from passive to active strategies.
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Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of [February 29, 2024] . Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the [author] and not necessarily Amundi Asset Management and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product or service. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not indicative of future results. Amundi US is the US business of Amundi Asset Management.
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Investment Talks
US High Yield Market Outlook & Positioning
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Investment Talks
Capturing the Momentum of a Narrowing Earnings Gap
Since early 2023, a handful of the market's top stocks, including the Magnificent Seven, have surged in earnings and valuation, and have dominated returns. Underneath the surface of today's concentrated, crowded market, sharp earnings recoveries may soon play out and structural changes may occur in many industries, creating new winning and losing stocks. Separating the potential winners from the rest of the market will be key to portfolio success over the next year, and beyond. With so much uncertainty and variability across industries and companies, we believe active management is essential to capturing the momentum of a changing market.
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