Stock Volatility Is Helping Active Fund Managers, Schwab’s Sonders Says

(Bloomberg) -- Charles Schwab & Co.’s Liz Ann Sonders says diverging fortunes between stocks are providing opportunities unseen in years for active managers to showcase their investing smarts. 

“The playing field is much more level now active relative to passive,” the firm’s chief investment strategist told Bloomberg Television’s Surveillance on Tuesday. “There is improving opportunity for active to add some relative performance here. That’s not been the case for many years.”

The S&P 500 Growth Index is down a whopping 19% this year while the value benchmark is down a more modest 3%. At the same time, earnings season is creating fresh volatility across equities including technology names, potentially giving stock pickers a chance to outperform broad indexes. 

“You’re seeing a widening out, more of a dispersion, even among some of the large cap, the super-seven kind of names -- much more dispersion in terms of performance,” said Sonders. “You’re seeing it through earnings season as well.” 

Read more: S&P 500 Sector Market-Cap Distortions Imply Bubble Risk Remains

The investor said that while capital flows have been steady, market anxiety has picked up. 

“In large part it’s due to the sentiment environment and where we are in the monetary policy cycle with rising interest rates putting downward pressure on highly valued segments of the market,” Sonders added. 

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