On March 1, Greg Leonberger, director of research, was quoted in a FundFire article on the asset allocation trend towards low-risk, low-fee products and smart beta. Despite the global popularity of smart beta, the strategy has been slower to take hold in the U.S. where actively managed equities remain a core part of diversification.
Greg provided perspective on the use of low-risk, large-cap equities over small-caps in the current market environment. “What we’re seeing in equities is more of a partiality for safe-haven large-cap strategies than for small-cap,” Greg explained. “Given the amount of uncertainty out there right now, the large-cap preference over small-cap is probably something that we expect to continue in 2016 unless something radical happens in the market to reverse the sentiment.”
The article pointed out that the same logic prevails in the factor investing philosophy that underlies most smart beta strategies.
“Then in January there was a reversal of growth versus value dynamic,” Greg continued. “After all these years, value outperformed growth stocks to start out 2016.”
To read the article, visit the FundFire website (subscription required).
For more perspective on the outlook for U.S. equities in 2016, view the 2016 Market Preview Briefing webinar.
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