The collapse in returns for UK active equity managers in 2016 has been painful. But the way in which returns have fallen illustrates the way they could suffer an even worse fate during 2017 if they continue failing to foresee swings in sentiment.

Since the credit crisis of 2008, UK equity managers have performed surprisingly well as local equities recovered from an oversold position, which resulted from the decision by pension schemes to cut down local exposures. Recession in the eurozone was also a factor.