Speaking to InvestorDaily, EC Pohl and Co chair and chief executive Manny Pohl said there has been a shift to 'risk-off' that has resulted in a sell-off of growth stocks and strategies.
“Because the index is dominated by the banks and the miners, if you want to outperform you pick the other stocks. But in this period it’s been exactly the opposite,” he said.
“The index has been one of the best performing managers and the active managers have just been left for dead, and if you’re in the small to mid-cap space the same thing is happening.”
The strength in banks and mining masked much of what was happening behind the scenes, Mr Pohl said, and that investors should use statistical factor analysis to assess manager performance.
Mr Pohl said prevailing market conditions can result in a net negative effect on returns, and investors need to understand whether a negative result is the fault of poor management or unfavourable conditions.
"When you get fund managers that are underperforming, there are people who analyse managers’ performance and break it down into factor analyses. Provided you’re a stock picker like us, they can show you whether you’re actually being rewarded for that risk that you’re taking," he said.
"People say stick to the manager, stick to the label. That’s fine, provided that the manager is doing what he should be doing properly – because when the environment is positive you get the double whammy of the environment plus what [the manager is] doing."