Active asset managers with a sector focus have been backed to outperform peers by a new report.
Northill Capital found they have “significantly outperformed both generalist active asset managers and passive mandates across multiple asset classes over the past five years”.
Researchers compared the average five-year performance of 2,004 active US equity strategists, with combined assets under management (AUM) of $3.9 trillion.
They found the most focused managers (in the top decile) generated average annualised gross outperformance of 116 basis points (bps) a year relative to their benchmark.
This compared with two bps for the average manager.
Northill’s Jon Little said: “This report provides evidence of a persistent link between asset managers focused on one asset class and their success in delivering outperformance to investors.”
Ryan Sinnott, director of strategy and development at Northill, said: “Our findings show that focus tends to drive outperformance in multiple asset class disciplines; on average, focused active managers outperformed generalist active managers by an average 77 basis points per annum.”