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Market chaos gives money managers a chance to beat index funds — just like they’re supposed to do
MarketWatch
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⚡ Quantum Brief
Volatile markets in April 2026 are creating opportunities for actively managed funds to outperform passive index funds, reversing years of underperformance during stable conditions.
Geopolitical tensions, including the Iran conflict, and policy uncertainty are driving sector divergence, making stock-picking skills more valuable than broad-market exposure.
Index funds, bound by fixed allocations, cannot adapt to rapid sector shifts, while skilled managers can avoid underperforming areas and capitalize on undervalued opportunities.
Investors are advised to reallocate portions of their portfolios to active funds, as market chaos favors tactical strategies over "set and forget" approaches.
The shift marks a potential turning point for active management, which has struggled to justify fees amid prolonged index fund dominance.
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Market chaos gives money managers a chance to beat index funds — just like they’re supposed to do(5 min)(5 min)This is an opportune time for individual investors to reallocate part of their holdings to actively managed mutual funds, which may be better equipped to navigate current market conditions and potentially outperform their benchmarks.The U.S. stock market is going through a somewhat unusual period. In addition to the increased volatility driven by the Iran war and policy uncertainty, recent market performance has been marked by a large divergence in returns across different sectors of the economy.A Dow Jones CompanyCopyright © 2026 MarketWatch, Inc. All rights reserved.
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Source: MarketWatch