US growth stocks surged in the first half of 2017, fueled by mega-cap technology companies. Active managers of growth portfolios have done especially well, reinforcing the case for stock-picking strategies.
Last year was tough for investors in US growth stocks. Only 6% of active managers in large-cap growth equities beat their benchmarks during 2016—the worst year on record. But this year’s rebound has been swift, with more than 70% of active growth managers outperforming their benchmarks in large-, medium- and small-cap stocks through May, according to Morningstar data.
Market conditions today warrant an active approach, in our view. Valuations are relatively high and volatility is very low. In this type of market, we believe careful stock picking driven by fundamental research is the best way to avoid risky parts of the market and deliver solid long-term returns.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.
© 2017 AllianceBernstein L.P.
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