Market Environment Favors Out-Performance by Stock Pickers, According to The Boston Company Asset Management Company
June 29 2009 - 8:55AM
PR Newswire (US)
Active Equity Managers Have Tended to Out-Perform Indexes Early in
Recovery BOSTON, June 29 /PRNewswire-FirstCall/ -- Actively managed
equity portfolios have tended to outperform passive investments
such as index funds following periods of extreme market distress,
and the current market environment potentially has set the stage
for out-performance by actively managed mutual funds and
institutional funds, according to an analysis by The Boston Company
Asset Management Company, LLC (TBCAM), part of BNY Mellon Asset
Management. "These periods of market distress have created wide
dispersions within stock valuations," said David A. Daglio, senior
vice president and team leader of TBCAM's opportunistic value
strategy. "In the past, good stock pickers have been able to take
advantage of these dispersions to add value. They were able to buy
attractively valued equities, while avoiding less attractive
options." Approximately 64 percent of all equity mutual funds with
reportable data have outperformed their benchmarks for the first
five months of 2009, according to Lipper Equity Fund Performance
Analysis Service, and similar trends have been observed for the
early part of 2009 for actively managed institutional funds. TBCAM,
which manages both mutual funds and institutional accounts, noted
in its analysis that equity levels are approaching attractive
levels last seen in the 1940s. At the same time, the analysis noted
that cash-flow yields are at 57-year highs. "The early part of 2009
appears similar to other periods that we have studied, where market
distress has created exceptionally wide valuation spreads across
the marketplace," said Daglio. "During these periods, the good
stock picker is able to select equities with historically low
valuations and where fundamental recovery prospects have been
ignored." Other periods that exhibited similar distress included in
the TBCAM study were 1974 - 1975, 1990 - 1991, 2001 - 2002 and 2008
- 2009. "Relative performance for the first five months of 2009 was
strongest in the small cap equities asset class, where 70 percent
of small cap actively managed portfolios were ahead of their
benchmarks," Daglio said. "Active management allows for the
inclusion of the best investment opportunities in the portfolio,
while excluding securities that are identified as fundamentally
weak or having unattractive valuations that could dilute portfolio
returns," said Michael K. Arends, portfolio strategist for the
TBCAM opportunistic value team. "We have had good success
exploiting these opportunities over the last several months."
Arends added the TBCAM analysis concluded that active managers have
been able to beat their indexes for a multi-year period following
severe market distress. "Given the severity of the recent market
decline and breadth in valuations in most market sectors, we
believe that this is an opportunity for good stock pickers to
out-perform." Notes to Editors: The Boston Company Asset
Management, a BNY Mellon Asset Management investment boutique,
provides investment management services for corporate, public,
mutual funds and Taft-Hartley retirement plans, endowments and
foundations. BNY Mellon Asset Management is the umbrella
organization for The Bank of New York Mellon Corporation's
affiliated investment management firms and global distribution
companies. The Bank of New York Mellon Corporation is a global
financial services company focused on helping clients manage and
service their financial assets, operating in 34 countries and
serving more than 100 markets. The company is a leading provider of
financial services for institutions, corporations and
high-net-worth individuals, providing superior asset management and
wealth management, asset servicing, issuer services, clearing
services and treasury services through a worldwide client-focused
team. It has $19.5 trillion in assets under custody and
administration, $881 billion in assets under management, services
more than $11 trillion in outstanding debt and processes global
payments averaging $1.8 trillion per day. Additional information is
available at http://www.bnymellon.com/. Past performance is not
predictive of future performance; future performance is not
guaranteed. Some information contained herein has been obtained
from third party sources that are believed to be reliable, but the
information has not been independently verified by TBCAM. TBCAM
makes no representations as to the accuracy or the completeness of
such information. All information source BNY Mellon Asset
Management as at 31/03/09. This press release is qualified for
issuance in the UK and US and is for information purposes only. It
does not constitute an offer or solicitation of securities or
investment services or an endorsement thereof in any jurisdiction
or in any circumstance in which such offer or solicitation is
unlawful or not authorized. The views in this press release are
those of The Boston Company Asset Management, LLC, may change with
the market changes, and do not necessarily represent the views of
the BNY Mellon Asset Management organization. This press release is
issued by BNY Mellon Asset Management (US) and BNY Mellon Asset
Management International Limited (ex-US) to members of the
financial press and media and the information contained herein
should not be construed as investment advice. Registered office of
BNY Mellon Asset Management International: The Bank of New York
Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA.
Registered in England no. 1118580. Authorized and regulated by the
Financial Services Authority A Bank of New York Mellon Company(SM)
DATASOURCE: The Bank of New York Mellon Corporation CONTACT: Mike
Dunn, +1-212-922-7859, , or Jamie Brookes, +44-20-7163-2146, Web
Site: http://www.bnymellon.com/
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