Why active managers are mimicking the flaw of passive benchmarks

For years, active managers have been under pressure on performance as many struggle to outperform the passive indexes. The struggle is especially salient in the US large cap space with the continued dominance of the Magnificent Seven.

But Aziz Hamzaogullari, Chief Investment Officer of Loomis Sayles’ Growth Equity Strategies, argues the critics are aiming at the wrong target. The real problem isn’t active management itself, but that most active managers have stopped being active, and are mimicking the same momentum-driven, price-weighted flaws baked into the benchmarks they’re supposed to beat.

In a conversation with Top1000funds.com editor Amanda White, Hamzaogullari unpacks what genuine active management demands in his view: a long-term structural approach, as opposed to frequent trading and high-turnover, and truly differentiated insights, which focuses on the quality of ideas not the quantity. For example, he believes there will only be five to six companies which will benefit disproportionally from the AI trend while most of the other companies will struggle to sustain long-term growth.

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Performance data shown represents past performance and is no guarantee of future results. Investment return and value will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. For most recent month-end performance, visit www.loomissayles.com. Returns reflect changes in share price and reinvestment of dividends and capital gains, if any.

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