The pursuit of outperformance: Unconstrained equity investing

Jay Jacobs Jun 18, 2024 Equity


  • Unconstrained investing allows for a more flexible approach to portfolio management and the potential to outperform.
  • By removing benchmark constraints, portfolio managers can focus on long-term growth and compounding returns.
  • Active ETFs offer a convenient way to access unconstrained investing strategies.


When it comes to investing, many look to two main approaches — active and index. Both are accessible today via ETFs. 

Index ETFs seek to track a market index, like the S&P 500. This typically means investing in all the companies in that index, resulting in a mix of many stocks. Index ETFs are a convenient way to gain exposure to broad markets, a single industry or even a theme like artificial intelligence.

Active ETFs are growing as a category. Active strategies are led by portfolio managers who thoughtfully select investments and construct a portfolio based on their belief it can outperform the broader market. While active strategies do have a benchmark, the investment teams screen individual companies for positive characteristics and inclusion in their portfolio, applying in-depth research to identify the most compelling investment ideas.


An unconstrained investment approach gives the fund manager unbridled freedom to choose investments for the portfolio without the boundaries of a broad market benchmark.

Unconstrained investing has several key benefits. Specifically, it enables portfolio managers to:

  • Invest with conviction in stocks they believe will outperform, without being bound by the industry, sector or geographic dispositions of a market benchmark.
  • Retain high-performing stocks over extended periods, leveraging the power of compounding to help enhance returns.
  • Break away from the masses, creating a portfolio of “best ideas” that is truly differentiated from the broad market.

The result is a portfolio that has the flexibility to pursue opportunities beyond the confines of traditional benchmarks, with the objective of outperformance and growth.

To explore the world of active ETFs and how they can revolutionize your portfolio management strategy, visit

Photo: Jay Jacobs

Jay Jacobs

U.S. Head of Thematic and Active ETFs at BlackRock