It's time to be an active manager again.
After more than a decade of benefiting from historically low interest rates and the resulting surge in asset prices, we're faced with the looming question: What happens if the unthinkable occurs? The landscape of investment options has shifted significantly, with alternatives to traditional market ETFs emerging, making it increasingly challenging to generate returns. As moderate inflation returns, we transition from a period of structural deflation to a more reflationary environment. With interest rates remaining relatively elevated compared to the past decade, the price paid for assets becomes a critical consideration. What may have proven successful as an investment strategy over the last decade may no longer be viable for the next.
As we move towards more normalized economic cycles, accompanied by a resurgence of animal spirits, we find ourselves on the brink of an economic boom. In light of these changes, wouldn't it be prudent to consider active management with a rigorous yet flexible approach to valuation, poised to capitalize on the growth potential of the real economy? Remember, there's always an alternative – choose Alpha over Beta!
