Low-Tech Active Management That Still Has an Edge

When BlackRock announced the latest retooling of its equity funds in March, the executive hired to lead the effort said the era of equity portfolio managers working with a handful of analysts in isolation was over. Stock market efficiency and competition from super cheap passive and quantitative options make it difficult for that model to achieve sustainable outperformance, said Mark Wiseman, BlackRock's global head of active equities.

The way forward for active equity managers, Wiseman and BlackRock contended, is to have both quantitative and old-school fundamental teams under one roof, sharing information and techniques.

Even though this is the approach BlackRock has been pursuing to varying degrees with dubious results for at least five years, many in the financial media interpreted BlackRock's equity reorganization 2.0 as a declaration of quantification and another death knell for stock-pickers who rely on traditional gumshoe and green-eyeshade techniques to beat the broad market.

The threats to bottom-up active equity management are real, and it is the rare stock-fund jockey who has not at least attempted to harness technology to refine and streamline his investment process. Yet the death of the old-timey stock selector may be exaggerated. There remain managers whose main competitive advantage is still essentially what Wiseman, BlackRock, and others claim is disadvantaged today: teaming with a handful of analysts to research and cogitate about stocks. Below are a few examples.

Stephen Yacktman and Jason Subotky of Gold-rated

Bill Nygren relies on the work of Harris Associates' central bank of analysts to help populate Gold-rated

There is nothing newfangled or intrepid about Silver-rated