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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
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Investment Talks
Opportunities in Catastrophe Bonds
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Investment Talks
Remain agile in bond selection, with an eye on last mile inflation
Though the US economy and consumers appear to have largely defied the "gravitational pull" of significantly tighter monetary policy, we continue to view the risk of a recession during 2024 as higher than normal. We expect that such a recessionary scenario would lead to significantly greater interest rate cuts, while the "no landing" scenario of more persistent inflation would delay the start of rate cuts. As developed economy central banks continue to grapple with when to start normalizing local monetary policy, now could be an interesting time for investors to strengthen their portfolios by extending the duration of their fixed income portfolios and raising credit quality and liquidity profiles while carefully weighing global opportunities.
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