Article: Where can investors expect outperformance from active management?

Scott Treacy | March 21, 2022

Actively managed global large-cap, non-US large-cap, and emerging markets equity outperform

Historically, active managers have been able to make handsome gains in volatile conditions, such as we face now. With markets buffeted by major geopolitical and economic worries as Russia invades Ukraine, we looked at how active managers have performed over the last decade to see where active management worked and outpaced benchmarks: which portfolios gave the most consistent performance, which underperformed, and which outperforming portfolios have capacity to take on further investment funds.

We examined 450 active asset manager portfolios from 187 firms (see appendix A).  We looked at calendar year gross returns against corresponding style benchmarks for global large-cap, non-US large-cap, emerging markets, and US large-cap equity asset manager peer groups, in the decade from 2012 to 2021.  The benchmarks used were MSCI AC World style indices (global large-cap), Russell 1000 style indices (US large-cap), MSCI AC World ex. US style indices (non-US large-cap), and the MSCI Emerging Markets style indices (emerging markets).  The style indices (core, growth, and value) were used to ensure that active managers were being compared to their most relevant benchmark.

We found that:

  • Active managers investing in global large-cap, non-US large cap and emerging markets equities enjoyed outperformance, based on the peer group average active returns.
  • Active managers investing in US large-cap equity had only meagre outperformance. Note: this is where most institutional investors use passive rather than active management.
  • The peer group average gross active returns over the period were: 1.3% for global large-cap, 2.2% for non-US large-cap, 1.9% for emerging markets equities, and 0.1% for US Large cap.

Below are the top 5 portfolios in each geographic segment of the public equity peer groups that performed most consistently, based on the number of calendar years they outperformed their relevant index, as well as their average gross active return over that period. 

Unfortunately, some of the best-performing portfolios are closed to new investors due to capacity constraints.  Some emerging well-managed portfolios that have capacity to take on new institutional assets include: 

Global large-cap equity

Non-US large-cap equity

Emerging Markets equity

US large-cap equity

The active versus passive management debate continues to grip investors. But with robust due diligence, history shows that institutional investors can enjoy consistent outperformance. Institutional investors have the opportunity to significantly enhance their plan assets by going with active managers in large-cap public equities. 


List of managers  included in the study.

In order to be included in the analysis, the portfolio needed at least 7 years of calendar returns, to be compliant with the CFA Institute Global Investment Performance Standards (GIPS 2020) and to have up to date strategy assets.


The material presented in this document is an assessment of the market environment as of the date indicated; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds or any issuer or security or similar.

This document contains general information only, does not consider an individual’s financial circumstances and should not be relied upon for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should always be given to consult a Financial Advisor before making an investment decision. 

Investment Metrics, a Confluence company, does not provide investment advice and nothing in this document should be considered any form of advice. Investment Metrics accepts no liability whatsoever for any information provided or inferred in this document.


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