Active equity managers must adopt hedge fund-style strategies to remain competitive amid the ongoing investor shift to low-cost passive vehicles, according to Olivier Nobile, a top-performing fund manager at Arkea Asset Management.

Nobile argues that integrating tools such as derivatives, algorithms, mathematical models, and hedging techniques is essential for active managers seeking to deliver outperformance and cushion portfolios against market stress. Arkea Asset Management, a unit of Crédit Mutuel Arkéa with $55bn in assets under management, has leaned into this approach through its thematic investment platform.

Two of Arkea’s flagship funds — Arkea Focus Human and Arkea Focus European Economy — have returned 9% and 18% respectively this year, outperforming nearly 90% of peers while maintaining lower volatility, according to Bloomberg data. Both funds have exceeded the Euro Stoxx 50 Total Return Index, which gained 12% over the same period.

“We are firmly convinced that the active equity management of tomorrow will only be hedge-fund like, that is to say with a combination of quantitative and fundamental drivers, and real management of extreme market risks via permanent hedging,” said Nobile. “This will allow fund managers to present a very different risk profile from passive equity management.”

By adopting a hedge fund-style quantitative process, Nobile believes active managers can better time exposures using real-time market signals, giving investors confidence that portfolios are being actively and defensively managed without requiring constant tactical adjustments.