The 14 money managers in the inaugural Squawk Box Portfolio challenge, who together oversee more than $160 billion, believe better times are ahead for the brave few nonindexers left on Wall Street in 2015. The group sees small caps, Apple and Google as ways to top the benchmark.
It's been tough times for those plying the stock-picking trade with just 19 percent of active mutual fund managers beating their benchmark last year, according to Bank of America Merrill Lynch. This poor performance comes during a roaring bull market entering its sixth year.
"As passive investing in ETFs exaggerates the normal inefficacies by increasing the short-term correlations among small and midsize stocks, bottom-up research becomes more rewarding," said Craig Hodges, a member of the Squawk Box Portfolio roster this year and CEO of Hodges Capital. Stock picking will come back this year "due in part to the prolific growth in ETFs, which has created opportunities for active portfolio management."
Hodges may be on to something because as volatility has increased in the fourth quarter and first days of 2015, so too has active management. In December, 43 percent of active large-cap mutual fund managers beat the Russell 1000, according to Bank of America.