Active managers generally performed poorly through 2011, particularly in global equities. The median manager underperformed the MSCI World Index by 2.3% in 2011. This was dominated by a very poor Q3. This was one of the worst quarters for active managers in the last decade - exposure to high beta or emerging markets dominated the underperformance.

While developed markets only fell 5% over 2011 as a whole, this masked significant deviations across the year (Q3 markets fell 16.5%; Q4 they rose 7.7%), and between sectors and regions.

A surprisingly high number of managers (64% or 125 out of 350) in the MPA Global Equity universe (core, value and growth) underperformed the MSCI World index in 2011. However, while only 32% of the core universe outperformed - highlighting the disparity of approaches across the value universe (was largely due to the yield strategies in the value universe).

STYLES THAT GENERALLY DIDN'T WORK IN 2011

• Thematic growth/aggressive growth: These managers focused on companies with anticipated high growth, often with a bias to emerging markets and taking on a high degree of duration risk.
  
  
• Momentum: These managers struggled to generate excess returns with there being a number of significant inflection points in markets during the year.
  
  
• Valuation and contrarian: Processes that focussed on cheap assets or cheap earnings generally struggled over 2011 as the markets were not willing to reward the potential for future recovery.
  
  
• Stock pickers: These managers had a challenging time as markets didn't differentiate other than on risk.

STYLES THAT DID WELL

• Quality-value: Managers focussed on companies which have a degree of certainty over their earnings but are cheap relative to historic valuations.
  
  
• Quality growth: Managers focussed on companies who have delivered consistent growth in the past and expect to be able to fund future growth from current operations.
  
  
• Income/yield: Markets reward the short duration of companies who pay out a significant proportion of assets.
  
  
• Minimum variance: The explicit avoidance of stocks with high beta/high volatility served very well.
  
  
• Absolute return: Managers with the ability to have significant allocations to non-equity assets (gold, cash or fixed income) were able to provide protection.

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