Investors look to active management for performance characteristics that are differentiated from the index. Areas of the market that experience greater dispersion may, on the whole, offer a better target for active managers. But an active allocation can benefit investors in asset classes with less dispersion, too, such as U.S. large cap equities.
Harnessing the Heterogeneity of Emerging Markets
Investors may allocate to emerging market equities in search of a growth rate that surpasses what is generally available in developed markets like the United States. But certain areas within emerging markets may offer better return potential than others—and passive strategies, which heavily weight areas such as Chinese steel companies and banks, often fail to capture this potential.
The Role of Active in U.S. Large Cap Equities
Even in U.S. large cap equities, which tend to experience less dispersion, combining active and passive strategies can add value. The flow of funds into passive strategies has created high valuations in certain sectors. In my view, adding exposure to more attractively valued sectors or investment factors may improve a portfolio’s return profile.
Follow @OppFunds for more news and commentary.
OppenheimerFunds is not undertaking to provide impartial investment advice or to provide advice in a fiduciary capacity.
Mutual funds and exchange traded funds are subject to market risk and volatility. Shares may gain or lose value. Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes, regulatory and geopolitical risks. Emerging and developing market investments may be especially volatile. Eurozone investments may be subject to volatility and liquidity issues. The mention of specific countries or sectors does not constitute a recommendation by any particular Fund or by OppenheimerFunds, Inc.
These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.