Darius McDermott: Is now the time for your clients to go short?

Over the past five years or so, the correlation between different stocks has been high and dispersion has been low, with the gap between the best and worst performers narrow. One reason for this behaviour is that macroeconomic issues have been driving markets. All eyes have been on central bank meeting minutes, with investors less inclined to focus on the prospects of individual companies. Another driver has been the rise of passives. Index funds and exchange-traded funds have risen from around 7% of total managed assets 10 years ago, to around a third. Equity markets have performed very...