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Style Analytics finds active managers outperform over longer term

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A new research paper from factor-based portfolio management tool provider, StyleAnalytics, finds that active managers outperform broad markets during market downturns.

Specifically, the paper found that active equity managers outperformed the Russell 1000 index significantly during market downturns over the past 25 years.

The firm analysed over 1,000 actively managed US funds from 1995 through 2020 and found that quality active managers not only beat passive investment during downturns, but that the outperformance grew with larger market losses. 

Commenting on the findings, Style Analytics’ CCO Damian Handzy says: “Our report clearly demonstrates that good active managers consistently outperform passive funds through downturns and this is even more pronounced during times of market dislocation. The downside risk protection afforded to active managers means we could start to see active funds regaining lost ground, possibly at the expense of passive indexes.”
   
The study found that during significant financial market dislocation including the Tech Bubble from August 2000 – September 2002, the Global Financial Crisis from October 2007 – February 2009, the Debt Downgrade from April – September 2011 and the Taper Tantrum from September – December 2018, active management did better when compared to the average down-market month.

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