Fund Selectors Pivot to Active Management Amid Market Volatility

Over half of the independent financial advisors, discretionary fund managers, and private bankers surveyed are moving toward active strategies while keeping their core equity holdings intact. This shift reflects a strategic departure from the 29 percent of professionals currently favoring cash and short-duration bonds, and the 18 percent opting for defensive assets. The rationale is clear: active managers can selectively target resilient sectors like cybersecurity and defense, while actively avoiding companies with supply chain vulnerabilities exposed by current macroeconomic instability.

Sentiment is tilting decisively, with 57 percent of respondents reporting a much more favorable view of active strategies, compared to 39 percent who lean slightly toward passive options. This momentum is expected to persist, as 95 percent of those surveyed plan to increase their active allocations by 2027. Tom Carroll, CEO of Rathbones Asset Management, noted that extreme market concentration in equity indices and the ability to identify sector winners are primary catalysts for this transition. Furthermore, 99 percent of participants expressed concern that passive growth trackers are over-exposed to companies with stretched valuations, suggesting that indexing may be falling out of favor for complex assets like emerging market debt and small-cap equities.