Rethinking Investment Philosophy
John R. Minahan, Ph.D., CFA and Thusith I. Mahanama, M.S.
The wider use of investment philosophy in active manager selection may help identify managers with real potential to outperform passive options, drive mediocre managers to improve, and eliminate managers with no hope of adding value to clients—all good things for active managers, asset owners, consultants, and in particular, the ultimate beneficiaries of funds…
Shining a Light on the “Last Mile” at Investment Management Firms
Prepared with input from Peter Mixon, partner at the law firm
of K&L Gates LLP and former General Counsel for CalPERS.
As a fiduciary, you rely on investment results provided by managers to make almost every important decision regarding the assets under your stewardship. Portfolio performance and attribution data play a big role in helping you vet potential investment managers…
What have you done for me lately?
The five- and 10-year active return series relative to an appropriate benchmark is an investment industry standard. Asset owners and consultants rely on these numbers to evaluate managers’ past performance, as well as to quantify the probability of future outcomes. For asset managers, these numbers can make or break reputations, and their prominence—or lack thereof—in marketing materials is usually a telltale sign of how good their record is…
Here’s to you, Joe DiMaggio!
What winning streaks can tell us about manager performance
Winning streaks are impressive. But are they reliable indicators of skill or just lucky accidents? And, perhaps more important, can they offer insight into a manager’s performance prospects?
In this paper, we turn our attention to Joe DiMaggio, Steven Jay Gould and others to learn what, if anything, investment performance winning streaks can tell us about the future…
How High Does Your Manager Bounce?
Here in Red Sox Nation, we know a thing or two about sticking with your team during the bad times.
Sure, we grumble among ourselves, but just let one of those New York fans pass a snarky comment and we
close ranks quicker than a Roman phalanx. “You just wait,” we say. “They’ll bounce back. They always do.” Not only do the Sox bounce back, but their rebounds are often spectacular. Just look at their 2013 World
Series win, just one year after their worst performing season in 47 years…
Active Portfolio or Incompatible Benchmark?
As an asset owner, you know that statistics like active share can help you quantify just how active your
investment managers are. An active share of at least 60% versus the benchmark is good, and an active
share in excess of 70, 80 or 90% is even better, depending on the mandate. So how do you determine that a manager’s high active share stats reflect their active investment skill
instead of just a poorly chosen benchmark?…
Are You Paying Active Management Fees for Not-So-Active Management?
Seven years ago, professors Martijn Cremers and Antti Petajisto introduced a new metric for determining
which mutual fund managers were making active bets against their benchmark. They called the new
tool “active share” and went on to conclude that managers with an active share of 80% or higher tend
to outperform their benchmarks—after fees—and they do so with persistence…