Active management is intrinsically difficult. The tendency of most active managers to under perform passive benchmarks has, if anything, grown in recent years, and this has led some observers to advocate that active managers should become more aggressive and operate more concentrated portfolios. A manager who chooses to concentrate can only hope to improve his results if he has a particular type of skill, and this skill must be quite rare. If this were not so, active funds would not be facing a performance challenge in the first place. For the industry as a whole, higher concentration levels may raise active risk, make skill harder to detect, increase costs, and reduce the number of outperforming funds. Furthermore, it may confuse, rather than clarify, the interaction of asset owners and asset managers. The challenge for an asset owner is to distinguish genuine skill from good luck. The challenge for a manager with genuine skill is to demonstrate that skill to his clients.view more white papers
By downloading a white paper, you are agreeing to have your contact information shared with the content sponsor, who may then contact you.
All white papers posted were created by the listed authors who are solely responsible for the research, finding and all materials contained therein. Pensions & Investments has not verified or edited the materials (other than for length and style) and does not necessarily agree or disagree with the analysis and positions expressed by the authors. Reference to any company, product or service does not imply recommendation or sponsorship by Pensions & Investments.
For more information on submitting a white paper, please contact Richard Scanlon at firstname.lastname@example.org or 212-210-0157.