In theory, this is a perfect time for stockpickers.The rising tide of monetary easing after the financial crisis of 2008 lifted all boats. Setting aside even blow-ups as significant as the eurozone debt crisis, the following decade-and-a-bit provided a smooth descent in bond yields and a more than 300 per cent rise in global stocks. Managing money may not have felt easy over that period, but fund managers’ gruelling experience since the start of 2022 means they now look back on it as the best of times.
The upshot — for many fund managers at least — is that the era of relying on broad market shifts (“beta” in investment parlance) to construct a portfolio is over. Now, the discipline is in picking out winners and losers, and investing accordingly for “alpha”.
“Don’t hope for beta, focus on alpha,” said M&G Investments, adding that “the market rewards selection”. The dispersion of returns between global stocks — the spread between winners and losers — is comfortably above the average and median levels of the past 10 years, it said, and even within sectors, it is often above the norm.