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Growth outplays value: Frontier

Growth continued to outperform value according to a new study by Frontier Advisers looking at the performance of fund managers in the final quarter of 20109/20.

In a note released to its clients, Frontier reported that growth-focused managers outstripped value managers by a considerable margin over the quarter, particularly across international markets.

"Those results typically came from managers holding technology-related stocks which have fared relatively well through COVID-19," Frontier said.

It reported the ASX 300 up 16.8% for the quarter and individual stock selection had a marked impact on performance for managers with exposure to technology, energy and consumer discretionary sectors each delivering double digit performance.

In a flip of the previous quarter, healthcare, consumer staples and utilities provided a drag on performance for the period despite being among the best performers for the full 12 months.

Frontier senior consultant Simone Gavin said growth managers continued to outperform core and value managers in relative terms, although the difference was less significant than in the March quarter.

"Active managers broadly provided an excess return over the benchmark for investors with cyclical stocks rallying and defensives generally underperforming," she said.

Globally, the performance across sectors was quite different, with only the technology, consumer discretionary and material sectors registered a positive result for the quarter to June.

Emerging markets did not perform as well relative to developed markets for both the quarter and the year as a whole.

Frontier said China exposure and industry biases had a major impact on manager performance with those high in tech and e-commerce among the best performers.

Active management paid off for those managers investing to a growth style; however, most core and value managers across international portfolios underperformed.

Meanwhile, active management in emerging markets produced mixed results.

"High growth, technology-focused managers continued to generate extremely strong returns for the quarter with a small number returning in excess of 40% for the period," Gavin said.

"Broadly, we saw global growth managers achieve a mean over 10% for the quarter compared with a 2% loss on average for their value manager counterparts."

Read our full COVID-19 news coverage and analysis here.

Read more: FrontierFrontier AdvisersASXSimone Gavin
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