According to results from the 2016 MFS Active Management Sentiment study, actively managed strategies continue to dominate investment portfolios, and confidence in active management remains strong.
In line with global respondents, professional investors in the UK have allocated more than 70% of their total assets under management to actively managed strategies, and 7 in 10 UK respondents have confidence in active management. The study, which was conducted by the research firm CoreData Research in August of 2016, comprises the insights from 845 financial advisors, institutional investors and professional buyers around the globe, including 50 respondents in the UK.
“In recent years we have seen flows into passive accelerate, but professional investors are still showing strong support for active strategies,” said Madeleine Forrester, managing director of UK Institutional Business with MFS. “Investors are continuing to allocate to active management today and results clearly show the role it will play in future as markets will likely become more volatile in the years ahead.”
In line with global respondents, 9 in 10 UK professional investors are at least somewhat concerned about a major drop in equity markets over the next 12 months. Over three-quarters of UK respondents indicate that protecting capital in down markets is one of the most important attributes when considering an active manager. Moreover, 56% maintain that active management offers superior risk management controls over passive investment options, and 48% believe actively managed strategies are the best way to mitigate downside risk in a portfolio during a bear market.
Evidence supports their conviction. Over the past 25 years, the top quartile of active managers managing global strategies have added 7.6% in excess returns in falling markets.