JPMorgan: Sector Rotation Could Hurt Some Hedge Funds Even More

It has been mostly a difficult year for active fund managers, a JPMorgan equity strategy report notes, as even quantitative funds in the equity space are finding challenging market environments. Underneath the market structure is a stock sector rotation cycle in flux, moving from the overvalued and popular names to the undervalued. What has resulted is a largely rotation driven activity in a low volatility environment that might favor core value investors.

Many funds having difficulty outperforming relative to last year

One can make the argument that the active vs passive shift has really been more of a three or four-year trend,...