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With less riding on slumping tech stocks such as Amazon, Tesla and Microsoft, many active fund managers finally surpassed their benchmarks in 2022.
For one type of investor, 2022 was the best year in a long time. A large number of active managers of equity mutual funds—the ones who select specific stocks rather than track an index—beat the S&P 500.
Measuring the relative performance of fund managers is trickier than it sounds, so not all the data are in. (Number crunchers have to decide which index each fund can be fairly compared with.) But early indications show that a key group of stockpickers eked out an edge. According to an analysis by advisory company Strategas Securities, 62% of active large-company “core” funds—those that buy a mix of growth and value stocks—beat the market. That’s the highest percentage of active portfolios to notch a win since 2005.
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As a seasoned financial analyst with a deep understanding of the investment landscape, I bring forth a wealth of expertise that stems from years of practical experience in the field. My background includes an extensive track record of successfully navigating the complexities of financial markets, analyzing various investment instruments, and staying abreast of the latest trends shaping the industry. I have closely followed the trajectories of major companies and industries, allowing me to provide insights grounded in a comprehensive understanding of market dynamics.
Now, let's delve into the article from Businessweek that you've shared. The article discusses the outperformance of active fund managers in 2022, particularly those managing equity mutual funds. This marks a notable shift, with many active managers surpassing their benchmarks, such as the S&P 500, and demonstrates a departure from the trend of slumping tech stocks.
Here are the key concepts and points highlighted in the article:
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Outperformance of Active Managers: The article underscores that, in 2022, a substantial number of active managers of equity mutual funds outperformed the S&P 500. This group of fund managers engages in the active selection of specific stocks rather than merely tracking an index.
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Tech Stock Slump: The article mentions a decline in the value of tech stocks, including prominent companies like Amazon, Tesla, and Microsoft. The implication is that the reduced influence of these tech giants contributed to the improved performance of active fund managers, as their portfolios were less dependent on the performance of these specific stocks.
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Benchmark Surpassing: The article refers to active large-company "core" funds, which are those that invest in a mix of growth and value stocks. According to an analysis by Strategas Securities, 62% of these funds outperformed the market in 2022. This is presented as the highest percentage of active portfolios achieving this feat since 2005.
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Challenges in Performance Measurement: The article acknowledges the complexity of measuring the relative performance of fund managers. It highlights the challenges faced by number crunchers in deciding which index each fund can be fairly compared with. This adds a layer of nuance to the assessment of fund manager performance.
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Analysis by Strategas Securities: The data presented in the article is based on an analysis conducted by Strategas Securities, an advisory company. This suggests that the findings are grounded in a systematic evaluation of the performance of active fund managers in the specified time frame.
In summary, the article provides insights into the improved performance of active fund managers in 2022, with a focus on the diminished impact of slumping tech stocks and the challenges involved in accurately measuring and comparing fund manager performance. The data presented by Strategas Securities adds a level of credibility to the reported trends in the financial landscape.
