Concentration or Diversification: Which drives outperformance in actively managed strategies?

With broad equity markets performing exceptionally well over the last five years, there has been much debate over the benefits of active versus passive investment strategies. As strong proponents of fundamental investing, we have long believed that well-executed, actively managed strategies outperform passive index-based approaches over full market cycles. But within the active management camp, there remains significant discussion over how to best deliver that outperformance.