What Goes Down Must Go Up
The percentage of active-fund assets outperforming the S&P 500 moves in cycles with outperformance recently hitting a trough. There are reasons to expect improvement.

  • Active performance relative to passive looks to have bottomed out and may be moving higher as it has done several times in the past.
  • Given that the economic cycle is in a more mature phase, macroeconomic factors should give way to more stock-specific drivers of return.

  • This should lower correlations among equities (see March 15, 2017, Alger On the Money) and increase return dispersion, allowing stock pickers to perform better relative to their passive benchmarks.​​​

S&P 500: an index of 500 stocks seen as a leading indicator of U.S. equities and a reflection of the performance of the large cap universe, made up of companies selected by economists.

The views expressed are the views of Fred Alger Management, Inc. as of March 2017. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.

Fred Alger & Company, Incorporated 360 Park Avenue South, New York, NY 10010 / www.alger.com

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