More than half of large cap fund managers outperformed their benchmarks during the first half of the year, a remarkable comeback for active portfolio management. In fact, Bank of America Merrill Lynch says this is the first time this has happened since they started keeping data on it. They credit a handful of factors that drove this commanding outperformance among large cap fund managers, one of which was the massive size of their allocations to the FANG stocks (Facebook, Amazon, Netflix, Alphabet/Google).
Tech, Growth, Quality styles led in the first half
BAML Equity and Quant Strategist Savita Subramanian and team outlined these factors in a recent report. They noted that U.S. equities had their best start to the year in a long time as they continued reaching new highs in the first half of the year. In fact, stocks beat most of the other asset classes, with non-U.S. equities leading those other asset classes, even though there were some “defensive market internals” during the first six months of the year.
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