Collapsing Asset Correlations Have Active Managers Celebrating Trump Disruption

The lockstep moves in financial assets that characterized markets in the past few years are breaking down. And that's got stock pickers ready to pounce.

Correlations among stocks, bonds and other securities have tumbled since the U.S. election, as investors scramble to assess the implications of Donald Trump's policies on global financial markets. For money managers who've been consistently beaten by passive investments, the divergence provides an opportunity to reassert dominance.

"Capital markets are trying desperately to tease out the exact effects of the incoming Trump administration on everything from health-care and energy policy to consumer spending and interest rates," strategists at Convergex Group LLC wrote in a note to clients Thursday. "All this highlights the second-best thing about the rally since election day — the first meaningful breakdown in correlations between capital market asset prices since the financial crisis.''