Time for active managers to prove themselves as volatility returns

Challenging times as QE era comes to an end

Quantitative easing has been a challenging aspect of the market for active managers over the past decade as the flood of central bank money lifted stock prices and supressed volatility leading to underperformance, greater risk taking and huge flows into passive products.

The S&P Dow Jones Indices' SPIVA Europe Scorecard shows the impact QE has had on active manager performance. The latest report, published last June, showed only 29.1% of sterling-denominated global equity funds managed to outperform the S&P Global 1200 index over one year, while over a ten-year period this proportion plummets to just 5.6%. Prepare for 'strange' occurrences as liquidity concerns overlooked However, the era of QE is coming to an end with central banks looking to reduce balance sheets so there are enough tools in the "war chest" to underpin markets in times of difficu...