The 200-day “report card” for this bull market shows the best initial-performance gain of all postwar bulls, but it’s come at a price. Investor sentiment is above levels seen at the same point of past bull markets… and there are the valuations.
With the enormous popularity of ETFs, we’ve wondered if the high level of passive fund ownership could lead to stock price deviation from company fundamentals, and thus create greater price volatility.
Herein we provide a year-end update on the factors we determined were important to the active/passive relationship. We found that the market environment and the success of active managers changed significantly in late 2016.