Though passive management has been on a roll for years, the results of the presidential election might change that.

Jonathan Golub RBC Capital Markets Chief US Market Strategist

RBC Capital Markets analyst Jonathan Golub, as highlighted by Teresa Rivas of Barron's, wonders if Donald Trump's victory might be a net positive for active asset managers. Golub sees active PMs, on average, applying various "tilts" to their overall portfolios, tilts that he sees as having been out of favor in recent years but perhaps coming back into favor under the incoming administration.

Golub sees active PMs net favoring smaller stocks, financial stocks ("active manager's largest overweight"), and stock fundamentals (like low price-to-earnings ratios). All of those tilts, he says, have swung back into favor since the election, and he argues that they could continue. On the flip side, he sees a Trump presidency possibly reversing the low-volatility, high-correlation trend that has contributed to perceptions that too many active PMs are index-hugging; if volatility goes up, Golub argues, that's "a more favorable backdrop for active managers." 

Edited by: Neil Anderson, Managing Editor


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