How are energy investors positioned?
Investing.com -- Dan Draper, CEO of S&P Global’s (NYSE:SPGI) Dow Jones Indices, said passive investing continues to outperform active management across global markets, with over 90% of large-cap active managers in the U.S. and Japan underperforming their benchmarks over a 10-year period, according to S&P’s SPIVA data.
"The numbers just frankly, don’t hold up very well for buy and hold investors," Draper told CNBC on the sidelines of the S&P DJI Japan ETF conference.
Despite global geopolitical and macro volatility, Draper noted that domestic U.S. flows into equities remain resilient, even as foreign investors rotate into non-U.S. assets amid a weakening dollar.
"International investors [are] finding perhaps more value elsewhere," he said, pointing to Asia and Japan in particular.
He added that recent Treasury auctions and bond market volatility have pushed yield curves steeper, driving a return to risk premia in both equities and credit markets. Draper also flagged strong demand for investment-grade bonds, while high-yield and private credit remain under pressure.
On sector trends, Draper acknowledged a slowdown in demand for energy transition and ESG-linked ETFs, especially in the U.S., but emphasized that long-term structural trends in carbon reduction and sustainability remain intact.
While avoiding specific macro forecasts, Draper said markets appear to be recalibrating after April’s risk selloff, with May seeing mean reversion.
"The market is starting to factor in and discount the different risks," he said, adding that Fed policy and global bond markets remain key to watch in the months ahead.