Funds employing a value-oriented investment style outperformed growth funds across all equity markets, particularly outperforming growth funds concentrated in technology stocks.
And in challenging conditions for fixed income markets, active bond managers showed their capacity to protect from downside by decreasing their interest rate sensitivity data shows.
The data come from FE Fundinfo, following its twice yearly ‘Crowns’ rebalance, which takes place in January and July.
The firm said value and cyclical managers tended to excel in markets where resilience is a driver, which was the case in 2023. Their portfolios are often composed of companies that thrive during periods of economic expansion, said the firm.
These managers strategically invest in undervalued assets and industries poised for growth, leveraging the global economy’s resilience to enhance their performance.
In contrast, defensive growth-oriented managers, who typically invest in companies with consistent earnings regardless of economic conditions, typically underperform when economic conditions are better than expected.
Charles Younes, deputy chief investment officer of FE Investments, said: “Contrary to expectations one year ago, 2023 unfolded as a seamless extension of 2022, with inflation and central bank decisions emerging as pivotal influencers in financial markets.”
He added: “While the trajectory of equity and bond markets shifted from negative to positive, the prevailing victors remained consistent – strategic bond managers, displaying adeptness in adjusting their interest rate sensitivity, and equity managers focused on value and cyclical assets.”
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