One very important aspect of the market that savvy investors are watching is the degree to which correlations have been coming down. When the bull market was first getting going, all stocks tended to be affected to a similar degree; a rising tide lifted all boats. Now, though, stocks are less correlated with one another, which means that it takes an expert stock picker to succeed in the market.
That's one reason we're seeing statistics like these: Only 36.7 percent of the benchmarks beat active managers in mid-cap growth funds last year, according to the S&P Indices Versus Active Funds U.S. Scorecard. Only 42.6 percent of the benchmarks beat active managers in large-cap growth funds last year.
We're entering a new era where those passive benchmarks aren't providing the same performance as active stock managers. That's one reason Echelon Wealth Strategies continues to be focused on active management for our clients.
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