Once considered the “forgotten space,” core equities are emerging as a potentially compelling allocation for U.S. equity investors—even during these volatile times. More recently, investors have tended to go passive in their core equity allocation —that sit at the intersection of growth and value— in favor of the stylistic growth and value strategies that tend to be tied to stages of the market cycle. This perception has made it challenging for active managers to stand out in this segment.
However, recent market dynamics, particularly the rise and fall of the so-called “Magnificent Seven” and the prevailing tariff-induced market volatility, underscores the need to re-evaluate core equities as a vital component of equity portfolios.
Many investors have gravitated towards passive strategies in core equities while actively pursuing large-cap growth and value stocks. It’s time to dispel the myth that core equities are best suited for passive management; they deserve renewed attention for their potential to enhance actively managed equity portfolios.
Dispelling decades of misconceptions around core equities
The truth is that core equities provide the broadest opportunity set for active management, presenting avenues for further upside in strong market environments and downside mitigation in weaker environments. An allocation to active core equities can lead to a lower average drawdown over long periods. This expansive space allows for tactical and agile active management, enabling investors to outperform across various sectors, including technology, financials, and consumer goods.
You can now read the full whitepaper at the link below
