As active stock managers continue to face competition from low-cost index funds, some firms have managed to outperform benchmarks by using “specialized expertise and fundamental research in sectors like real estate and energy,” according to an article in Institutional Investor.

The article cites the example of Cohen & Steers, a firm that has managed real estate investment trusts since the 1980s, which is “beating index fund rivals as many have been hit hard by problems in the retail sector.” The firm’s president and chief investment officer Joseph Harvey attributes the performance to the fact that its managers, “began lightening up on the fund’s exposure to retail about a year ago, something index funds, by definition, can’t do.”

The firm now integrates risk-management techniques into the investment process, the article says, “so it can confidently buy undervalued securities during market downturns,” and has also established goals and measurement techniques to ensure “conviction” in its portfolios—as measured by active share.

The article quotes Harvey: “The market has become much more macro where factors like momentum and value have come to dominate the markets for periods of time. We need to know what we might be vulnerable to.”