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Historically low interest rate volatility has taken its toll on fixed income revenues, forcing many dealers to streamline their business models and rethink the future of FICC as the driver of investment banking profits.
While 2014 has delivered another strong year for US stock markets, with the S&P 500 up 9% year-to-date, equity performance has been primarily driven by large cap companies and a renewed bid for technology stocks.
Once touted as a revolution in investment strategy by bridging the gap between active and passive approaches, smart beta indices that weight holdings according to factors other than market cap have struggled to live up to their back-test hype. While the sluggish performance highlights the need for a more active approach to passive investing, for some it is a sign that investment trends may be tilting back towards alternative alpha.