Searching for the grail to build all-weather portfolios

1 September 2021

 Amin Rajan in the Financial Time highlights that "institutional investors have moved on by embarking on a “third way” that combines active and passive styles within a diversified portfolio".

In fact, fund managers’ performance depends on time frames and market cycle. It is again confirmed by my research showing that, in H1 2021, 50% of active managers outperformed their passive fund counterparts (using my proprietary database covering more than 11000 European domiciled funds). Over the period, active managers are doing well in the China large-cap equity & Global Corporate bond universes while passive managers are doing well in the Eurozone large-cap equity and Euro Inflation-linked bond universes.

Therefore, being able to identify for each universe when the environment is more favorable to one or the other management style looks like the grail as it would allow to build all-weather portfolios.

Yet, current studies available for investors are mainly broad-brush statements showing the merits of one or the other management style. There is a real need for fair comparisons between active and passive funds to take an optimal decision. Shouldn't analysts be more focused on helping investors finding the right balance between active and passive funds?


Marlene Hassine Konqui