Velthorne Asset Management's latest investment strategy note examines the changing landscape of investment approaches in light of recent market conditions. The firm’s quantitative analysis suggests that 2026 marks a turning point, with market dispersion—referring to the gap between the best and worst-performing assets—reaching historically high levels. According to Velthorne Asset Management, this environment requires a shift toward active management, emphasizing individual risk factors over broad market trends.
A Changing Market Environment
For years, liquidity-driven bull markets supported the widespread use of passive investment strategies. However, data from Q1 2026 reveals that asset correlations are starting to decouple. Velthorne Asset Management notes that macroeconomic challenges are affecting sectors unevenly. While the broader S&P 500 index may experience relatively stable volatility, there is growing variance within the index.
Grant Velthorne, Founder and Chairman of Velthorne Asset Management, states that "the costs associated with holding companies that underperform within passive ETFs are becoming more pronounced." The firm advocates for a targeted investment approach, where capital is allocated to companies with strong financial positions and pricing power, while avoiding underperforming sectors typically found in traditional index strategies.
Active Approaches in Fixed Income
In the fixed income sector, Velthorne Asset Management identifies a shift due to diverging global central bank policies. The firm sees an opportunity in actively managed credit strategies, which focus on dynamic duration management to capture yield discrepancies across sovereign and corporate curves. This strategy is designed to generate positive real returns in a fluctuating interest rate environment.
Adapting to Geopolitical Changes
The passive, "set it and forget it" model of asset allocation is becoming less effective in the face of the geopolitical fragmentation of 2026. Velthorne Asset Management utilizes proprietary AI-driven sentiment analysis to adjust portfolio weightings in real-time, enabling it to respond to localized shocks that could impact a more static portfolio. By focusing on strategic alpha generation, the firm aims to deliver returns uncorrelated to the stagnation seen in broader market indices.
About Velthorne Asset Management
Velthorne Asset Management is an investment management firm based in the United States, focused on active capital preservation and growth. Founded by Grant Velthorne, a Harvard-educated economist with a background in international investment banking (Blackstone, Deutsche Bank), the firm combines academic insight with practical market experience. Velthorne Asset Management offers customized strategies for institutions and family offices, spanning global equities, fixed income, and private capital markets.
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Company Name: Velthorne Asset Management
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Email: info@velthorneassetmanagement.com
Website: www.velthorneassetmanagement.com
