Fri, Oct 24, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Absolute return performance study shows manager skill best revealed through decision analysis

Tuesday, May 31, 2011

By Beverly Chandler, Opalesque London

Specialist research and performance evaluation firm Inalytics and alternatives managers GLG have conducted a case study which shows that evaluation of every decision a manager makes in managing his or her portfolio gives a reliable measure of skill.

In Analysis of Management Skill, Inalytics’ Rick di Mascio and GLG’s Simon Savage refer to a study of school pupils in the US which found that high school grades are the most accurate predictor of achievement in the first year of college. However, the report observes "In our industry, intuition does not correspond with reality as a good period of performance is just as likely to be followed by a poor one."

The problem, according to the report, is that most institutional managers choose their managers based on their past performance, and while the Inalytics database shows that skills does exist, it doesn’t appear to be captured by looking to the past track record.

"Accepting that Managers have skill, but it is the tools used to find it that have let us down, requires a radical change in the way we go about evaluating Managers. By turning away from track records, and towards an evidence based approach that analyzes every decision a Manager takes to identify their real strengths and weaknesses, we have found the framework we are seeking" the report says.

This framework relies on analysing every purchase, sell and every decision to include or exclude a stock in a portfolio whic......................

To view our full article Click here

Banner

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Commodities - Oil wreaking havoc on small-cap energy stocks sliding 36%[more]

    From Bloomberg.com: Owning almost anything in the U.S. stock market has been a losing proposition since September. Owning smaller energy companies has been a catastrophe. Hercules Offshore Inc. and Resolute Energy Corp. are among 19 oil-and-gas equities in the Russell 2000 Index that lost more than

  2. Investing - Hedge funds favor equity long/short, Strategic bond managers hedge against further high yield sell-off[more]

    Hedge funds favor equity long/short From Securitieslendingtimes.com: Equity long/short strategies will generate good returns for hedge funds in the future, according to a panel at this year’s Risk Management Association Conference on Securities Lending in Naples, Florida. Panellists Sand

  3. Legal - Ex-hedge fund analyst weeps as judge hands down 5 year sentence, Former Columbus investment manager Steven P. Moore indicted on theft charges, SEBI confirms ban for Hong Kong hedge fund, SEC announces enforcement action against compliance officer[more]

    Ex-hedge fund analyst weeps as judge hands down 5 year sentence From Hereisthecity.com: An ex-hedge fund analyst was sentenced to 5 years in prison for his role in insider-trading scheme. The New York Post reports that former hedge fund analyst Matthew Teeple was sentenced Thursday to fiv

  4. Goldman in talks to acquire IndexIQ[more]

    From Bloomberg.com: Can Goldman Sachs put ETF investors on a liquid diet? Goldman is in talks to acquire IndexIQ, Reuters has reported. Index IQ is a small exchange-traded-fund firm known mostly for products that replicate hedge fund strategies, called "liquid alternative" ETFs. While IndexIQ has 11

  5. Other Voices: CALPERS dilemma should be a warning to hedge funds wanting institutional investors[more]

    From Ian Hamilton, founder of IDS Group. A quick comment on the CALPERS’ disinvestment from the hedge fund market and the jitters it is causing. Pension Funds should not be sheep and follow CALPERS’ decision as the issues that CALPERS has with hedge fund investments are in many ways unique t