Stock picking is making a comeback with nearly half of managers beating the market

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Stock picking is making a comeback as active investors are on pace for one of their best years in a decade.

"Good news for active managers: stock-picking is making a comeback," Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America Merrill Lynch, said in a note to clients last week.

A key reason for the better performance is that stocks are now less correlated with each other, compared with sectors overall. That suggests that picking stocks now matters more than just picking a winning sector, Subramanian said. That's even more exacerbated by the trade war, which is helping and hurting different companies within sectors. For example, tech companies with more exposure to foreign demand have been underperforming.

Growth funds have fared best this year, with 60% outperforming the Russell. Slightly less than half of value funds have outperformed their Russell benchmark, while core funds are the biggest laggards. Still, for those who are picking the right stocks, there appears to be a scarcity of opportunity, or so-called "alpha," so it's unclear whether their hot streak can last.

 

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Gosh, could that possibly be because the market has basically gone sideways over the last rolling year?🤷‍♀️

I guess so with the huge tax breaks

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