Bloomberg Intelligence's 'Equity Market Minute' 8/30/2021

Gina Martin Adams from Bloomberg Intelligence discusses the current state of the U.S. equity market, highlighting the performance of small cap and large cap managers. She explains the unique combination of low correlation and high dispersion in the S&P 500, which has historically led to successful stock picking. Small cap managers have benefited from defensive strategies, while large cap managers have struggled due to optimistic positioning. The future performance of these managers will depend on market trends, with small caps likely to excel in a stagnant market and large caps potentially thriving if cyclicals regain dominance.

What factors are currently favoring small cap managers in the U.S. equity market?

• High correlation and low dispersion

• Low correlation and high dispersion

• High correlation and high dispersion

• Low correlation and low dispersion

How often has the combination of low correlation and high dispersion occurred in the past decade?

• About 5 times

• About 10 times

• About 30 times

• About 20 times

What market condition led to large cap managers struggling in the third quarter?

• A decline in interest rates

• A surge in technology stocks

• An increase in market volatility

• A shift towards more defensive strategies

What strategy have small cap managers adopted to gain an advantage?

• Moving into defensive strategies

• Focusing on international markets

• Increasing cash reserves

• Investing in high-growth stocks

What could lead to large cap managers performing better in the future?

• A decrease in market dispersion

• An increase in market correlation

• A continued lack of market leadership

• A surge in market and dominance of cyclicals