Do fund managers adopt a macro or micro approach to investing in the stock markets?

One of the first decisions that a mutual fund manager has to take is whether to focus on the broad macros or the micro details. In a trending market, macros are good enough. You can be certain that if you buy a quality stock and hold it for a reasonable period of time, you are bound to achieve above average returns. The period between 2004 and 2007 was a classic macro play. Most quality stocks, irrespective of which sector they belonged to, gave above normal returns. The fund managers did not have to worry too much about specifics of stocks. Once they got the macros story and trend right, the stock returns would follow.

Post 2008, the markets have become a lot more micro-driven. For example just a handful of companies like Eicher, Britannia, Lupin, TTK Prestige etc have outperformed in this period. The focus was extremely stock specific and specific stocks that could scale up their business models with minimal debt only managed to outperform. To understand this little better, if a fund manager had taken a macro call on a PSU bank or a capital goods company in 2010, he would still be sitting on deep capital losses after 5 years. The primary job of a fund manager is to decide which of these approaches will work.