For the first time in six years, US fund managers have, on average, managed to outperform their indi...
For the first time in six years, US fund managers have, on average, managed to outperform their indices, and the leaders of the pack were those who favoured growth stocks and technology, according to Standard & Poor's latest US report.
Mainstream fund managers pipped the S&P 500 at the post in 1999, returning 27.4% against the index's 25.7%. Small cap fund managers did particularly well, securing more than double the performance of the S&P 600 Small Caps Index, with an average 31% gain against the index's 12%.
Last year's volatility gave fund managers plenty of scope for error. Market leaders switched from internet stocks to cyclicals before the final technology surge at the end of the year but it was growth fund managers, especially those concentrating on technology, that performed the best.
Despite the increased volatility and the fact that the markets performed significantly better than in 1998, the performance spread between funds stayed at about the same level.
Standard & Poor's director Peter Norton put this down to a broad trend amongst managers to align themselves more closely to their benchmarks, which in effect made them more growth-oriented. As long as technology stocks account for such a large part of market performance, managers will remain under pressure to keep up their exposure to technology, he said.
Not only are mainstream technology stocks driving market growth, but a huge proportion of start-ups are in that sector. It is not only technology that is benefiting. Venture capital in all sectors is surging, roughly doubling in value every year for the past three years. In 1999, US venture capital totalled $40bn and this massive capital movement plays a large part in driving not only the small cap sector but the whole corporate arena.
Some passive fees reduced by 50%
Creates platform business with £125bn AUA
'Annuities reinvented' paper
As US dollar strengthens