Knowledge is crucial to asset management success, yet few asset owners and only some managers know how to manage knowledge to achieve superior investment results, said a new study by Ashby Monk, executive director-global projects center at Stanford University, and Eduard van Gelderen, chief investment officer at APG Asset Management.
In surveys and interviews, asset owners and managers (primarily U.S.- and Netherlands-based) agreed that knowledge “or a deep understanding of the functioning of capital markets and its value drivers” plays a significant role in the investment process, the study found. Despite that, few respondents, outside of hedge fund managers, had coherent policies to leverage that knowledge.
According to the authors, “knowledge management,” typically associated with active management, is defined as the “explicit and systematic management of knowledge — and its associated process of creation, organization, diffusion, use and exploitation — in pursuit of business objectives.”
“It pays to have a knowledge management system,” Mr. Monk said in a telephone interview. “Of course, knowledge is an important part of good governance or management. (However,) logical steps need to be taken to look at knowledge as asset within itself,” Mr. Monk added.
The report further outlines the steps asset owners and managers can take to better manage knowledge starting with indentifying and communicating investment beliefs.
Other important steps are assessing opportunities for alpha and aligning people's skills with the alpha identified.
The study is available on the Social Science Research Network's website, a site for posting academic research.
