Capital Markets: Observations & Insights

​ Performance

Has Active Relative Performance Troughed?

• While there are secular pressures affecting U.S. active management, cyclical factors tend to be much more powerful in the short term. Examples include: ‒ small cap performance

‒ overall market performance ‒ non-U.S. stock performance ‒ interest rates/bond-like equities

Active Relative Performance Is Cyclical

2017 saw the best large cap active management performance in eight years

100%

80%

60%

40%

20% % of Fund Assets Outperforming

0%

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Source: Nomura/Instinet, Joseph Mezrich and FactSet through 12/31/17. Fund performance is trailing five-year data. Sidebar data based on active performance from Bank of America Merrill Lynch U.S. Equity and U.S. Quant Strategy using Lipper data

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