Active Fund Managers Staged a Big Comeback. Can It Last?
The resurgence of active fund managers amid a tech stock selloff underscores the potential for stockpickers to outperform in volatile conditions. This shift matters as it highlights the performance dynamics of concentrated indices like the S&P 500, particularly when broader market trends disrupt passive strategies. For FX traders, this could signal a rotation in market sentiment, influencing currency flows and risk appetite given that active management often thrives in periods of uncertainty.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). The recent trends suggest a complex interplay of risk and opportunity as managers refocus attention on stock selection during a pullback.
How firms align
Goldman aligns with the bullish narrative, projecting a target of 1.12, signaling confidence in recovery phases post-correction. Conversely, BofA's lower target of 1.04 reflects a more cautious approach, likely anticipating further weakness in broader markets.
What the data shows
Recent forecasts indicate an uptick in volatility, reinforcing a strategic pivot towards active management in equities. Notably, our research on market dynamics (/research/volatility-risk) supports this view, highlighting the correlation between index corrections and active fund performance.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Active fund managers are gaining traction amid tech selloff; could signal a broader market rotation.
- 02FX traders should note the heightened volatility and risk appetite shifts.
- 03Watch for currency reactions as market sentiment oscillates with active management success.
- 04Focus on levels around 1.075 as potential pivot points for EUR/USD.
Market implications
In the coming weeks, watch for key economic indicators and central bank communications that could impact risk sentiment. A decisive break above 1.075 in EUR/USD could reinforce bullish positioning among active managers.
Risks to this view
A reversal could occur if economic data points toward a stronger USD or if market sentiment shifts back towards passive investing. Key catalysts include upcoming Fed announcements that might redirect flows into safer assets.
Sentiment by currency
USD~EUR~JPY~GBP~Composite USD score: +0.00
Sources & References
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