Overweights and Underweights Among Large Cap Managers

February was not kind to large cap active managers. Nor has the year-to-date period been.

According to Savita Subramanian of the Bank of America Equity and Quant Strategy team, “Just 27% of large cap fund managers outperformed the Russell 1000 in February, down from 34% in January and the worst outperformance hit rate in nearly two years. The average fund returned -0.7% vs. 0.0% for the benchmark.”

BAML cites the high correlations of the period along with the low dispersion between the various sectors’ winners and losers as the primary culprits.

One other factor would be the sector overweights and underweights, which the crowd seems to have gotten wrong so far in 2016. Large cap managers piled into the banks at year-end 2015 thinking the Fed would continue to hike. As doubts about the economy (along with the collapse of the yield curve) became manifest, the bank stocks (and related financial names) got killed.

In the last quarter, large cap managers had been adding to energy stocks and lowering their exposure to another laggard group, health care. They’re sticking with the banks too, it appears.

Below is Savita’s chart, depicting the percentage of managers over- and underweight each sector with a comparison to where they were during Q3. It also shows the degree to which managers were over or under the benchmark weightings:

Screen Shot 2016-03-02 at 7.24.31 AM

Source:

Worst outperformance hit rate for large-cap funds in nearly two years
Bank of America Merrill Lynch – March 2nd, 2016

What's been said:

Discussions found on the web
  1. Eat Verts commented on Sep 22

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2016/03/02/overweights-and-underweights-among-large-cap-managers/ […]

  2. Vape Juice commented on Sep 25

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2016/03/02/overweights-and-underweights-among-large-cap-managers/ […]

  3. bitcoin era commented on Sep 30

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2016/03/02/overweights-and-underweights-among-large-cap-managers/ […]

  4. Smith and Wesson commented on Oct 14

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2016/03/02/overweights-and-underweights-among-large-cap-managers/ […]

  5. td bank online commented on Oct 14

    … [Trackback]

    […] Find More here to that Topic: thereformedbroker.com/2016/03/02/overweights-and-underweights-among-large-cap-managers/ […]

  6. 토토 commented on Oct 16

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2016/03/02/overweights-and-underweights-among-large-cap-managers/ […]

  7. 토토 commented on Oct 16

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2016/03/02/overweights-and-underweights-among-large-cap-managers/ […]

  8. tangerine bank canada online commented on Nov 17

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2016/03/02/overweights-and-underweights-among-large-cap-managers/ […]

  9. Regression Testing commented on Dec 18

    … [Trackback]

    […] There you can find 39157 additional Info to that Topic: thereformedbroker.com/2016/03/02/overweights-and-underweights-among-large-cap-managers/ […]

  10. qiuqiu999 commented on Dec 22

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2016/03/02/overweights-and-underweights-among-large-cap-managers/ […]

  11. human hair wigs commented on Jan 14

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2016/03/02/overweights-and-underweights-among-large-cap-managers/ […]