Thematic investing eclipses stock picking as alpha source

Martin Bendersky, co-managing director at Marble Bar Asset Management, described markets as ‘‘highly macro and thematic driven,’’ where common catalysts move whole sectors and reduce differences between individual companies. He said that in this setting alpha is increasingly generated by identifying and positioning for themes rather than by selecting single stocks.

He used artificial intelligence as an example, saying investors now need to decide where to be long and short across the AI theme instead of relying on the prospects of individual companies. Portfolio managers at Marble Bar are evaluated on their ability to deliver steady returns while operating with a theme-focused approach.

Questions have emerged about the place of multi-manager platforms in investor portfolios. Bendersky observed that despite rapid growth in these platforms over the past decade, they continue to have a role with investors. He noted rising competition and cost pressures have widened the gap between the largest platforms and mid-sized ones and that he expects a period of consolidation, adjustment and restructuring within the industry.

Those industry dynamics affect how Marble Bar selects partners. The firm places emphasis on the investment teams it chooses to work with, seeking managers who can preserve an edge as thematic drivers dominate returns.

When assessing prospective managers, Bendersky looks at four areas: people, strategy, edge and portfolio construction. He described strategy and edge as two-part requirements: structural edge and analytical edge. Structural edge means targeting market inefficiencies that a team can identify and exploit on a consistent basis; analytical edge refers to research capabilities that reveal opportunities others do not see.

Bendersky also said managers must demonstrate consistent performance over time given the changing sources of alpha. The remarks came in a recent interview in which he drew on his experience identifying market regimes and signs of potential downturns to explain Marble Bar’s adjusted approach to manager selection and portfolio positioning.