It's time to buy actively managed funds, instead of index funds, as assets that long walked in lockstep are set to move to a different drum, BNP Paribas said last week.
Over the past few years, assets had a single driver – central bank policy stimulus – and that meant that actively managed funds, which have higher expenses, underperformed funds that passively track indexes, noted Mirza Baig, head of foreign-exchange and rates strategy for Asia at BNP Paribas.
"All you had to do was basically buy something and sit on it," he noted, but added that now, that correlation was breaking down.
As an example, he pointed to the long-running negative correlation between and commodity prices, or that commodity prices historically usually fall as the dollar rises and vice versa. But over the past few weeks, he noted, oil prices have moved higher even as the U.S. dollar has jumped.
Baig said that's a signal that assets globally are ceasing to move in tandem.
"Everything is going to have its own story," he said. "We're not going to see perfect correlation between bond rates, equity and credit markets. We're likely to see much more idiosyncratic movements in specific asset classes."
He pointed to several reasons for the paradigm shift.
"The Chinese economy is now on a firmer footing because they are pumping the economy with fiscal stimulus. The Chinese are also shutting down the excess capacity in some of these sectors that were overcapacity, so steel and coal in particular," he noted. "In the oil space, the oil producers seem to have banded together to produce somewhat of a supply shortage as well to push up oil prices, so some of these supply side dynamics have changed."
He noted that a stronger U.S. recovery and a stable Chinese economy have changed the demand picture as well.
The shift toward more volatility and less correlation in markets is a positive for active managers, he said.
"When you have uncorrelated activity across asset classes it's the actively managed funds that are likely to do better and this is great news for the hedge fund industry," he said.
Baig tipped a top play on the new paradigm as shorting against a long play on Indonesia's rupiah.
"The Singapore dollar is a basket, which is tied to the yen, and the dollar, whereas Indonesia is a very commodity intensive economy," he noted. "If commodity prices are stable or stronger, then essentially that supports the Indonesian economy. The Singapore dollar is tied much more to the basket and therefore will continue to weaken."
That's a six-to-12 month, trade, he said.
BNP Paribas also liked being short the euro and long Brazil, on a similar view, he said.
"Brazil is a high-yielding commodity producing economy whereas euro is inherently about anti-dollar, the reverse of the dollar trend," he said, forecasting the euro would fall to parity against the greenback by the end of next year.
He added that as Brazil's central bank wasn't likely to cut interest rates much further, he wasn't bullish on the country's bonds, preferring to play .
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1