According to received market wisdom, with higher risk comes greater opportunity. Investment Insights explores what the potential for a higher volatility and dispersion regime may mean for active investors.
- Broadening array of outcomes for key macroeconomic variables, gradual removal of monetary policy support suggest higher volatility regime is likely to persist across asset classes
- We see the same drivers supporting and sustaining higher return dispersion within equity markets
- Strong historical relationship between higher return dispersion and outperformance in actively managed equity mutual and equity hedge funds
- Our view is that we are at the early stages of a multi-year market regime that is likely to offer high conviction active managers the opportunity to generate significant alpha