Wed, May 4, 2016
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

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. Hedge funds see $14.3bn outflows in Q1, CTAs and multi-strategy lead net inflows[more]

    Komfie Manalo, Opalesque Asia: The hedge fund industry saw net outflows of investor capital in the first quarter of the year, totaling $14.3bn, data from Preqin showed. This continues from the $8.9bn overall net outflows that funds recorded in Q4

  2. Third Point calls Q1 "catastrophic" for hedge funds[more]

    Bailey McCann, Opalesque New York: The first quarter of this year was rocky for hedge funds based on aggregate performance from the industry, but now we are beginning to hear what the managers thought of it as quarterly letters make their way to investors. Dan Loeb, CEO of New York-based $17 bill

  3. Asia - Stabilization of China's capital outflows may hinge on Janet Yellen, Fink says China to do well this year as bubble threat postponed, Chinese hedge fund to invest in India’s infrastructure[more]

    Stabilization of China's capital outflows may hinge on Janet Yellen From Bloomberg.com: Whether China’s recent stabilization of its currency and capital outflows continues -- or downside pressure reignites -- may hinge in large part on Janet Yellen. If the Federal Reserve chair sticks to

  4. …And Finally - After all, judges are human too[more]

    From Newsoftheweird.com: In March, one District of Columbia government administrative law judge was charged with misdemeanor assault on another. Judge Sharon Goodie said she wanted to give Judge Joan Davenport some files, but Davenport, in her office, would not answer the door. Goodie said once the

  5. Comment - Unmasking the men behind Zero Hedge, Wall Street's renegade blog[more]

    From Bloomberg.com: Colin Lokey, also known as "Tyler Durden," is breaking the first rule of Fight Club: You do not talk about Fight Club. He’s also breaking the second rule of Fight Club. (See the first rule.) After more than a year writing for the financial website Zero Hedge under the n