The performance dispersion across any investment universe is a gold mine for active investors that have the right tools to profit from it.
The ability to “identify and capture” some of the top 25% performers can make a big difference. In 2020, if you examine the S&P 500 constituents, the differential between the top 25% performers and the bottom 25% was massive. The average return of the top 100 stocks was 105% while the bottom 100 was -18%. This is enough to provide an opportunity for prepared, active stock pickers to beat the 16% return of the index.
By incorporating intelligent “trend validation” analytics, active managers will have a high probability to beat the benchmark.
Trendrating tracks and documents performance dispersion across all equities Markets, which can be leveraged using our unique rating methodology.
Below you will find performance dispersion for US Large Cap Stocks over the past six months.
The best average profit opportunities in the top 25% of performers by Sector were available in Consumer Discretionary, Communication Services and Energy, and least rewarding were Consumer Staples and Utilities.
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Source: Nasdaq Inc.