Thu, Oct 19, 2017
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. Regulatory - David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge, Carried interest tax: How much does it matter?, Odey sees 'terrifying' mix in MiFID, tapering, asset values, Hedge funds come together to share cost of MiFID and research, SEC turns up the heat on U.S. investment advisers, India's Sebi asks hedge funds to report investments in commodity derivatives[more]

    David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge From CNBC.com: David Stockman is warning about the Trump administration's tax overhaul plan, Federal Reserve policy, saying they could play into a severe stock market sell-off. Stockman, the R

  2. North America - Puerto Rico rejects loan offers, accusing hedge funds of trying to profit off hurricanes[more]

    From TheIintercept.com: Puerto Rico has rejected a bondholder group's offer to issue the territory additional debt as a response to the devastation of Hurricane Maria. Officials with Puerto Rico's Fiscal Agency and Financial Advisory Authority said the offer was "not viable" and would harm the islan

  3. Investing - WPP targeted by short-selling American hedge fund, Sun co-founder sells secretive hedge fund on big chip trade[more]

    WPP targeted by short-selling American hedge fund From Cityam.com: An American hedge fund has mounted a bet against WPP, the world's largest advertising group, with a trade worth almost £90m. Lone Pine Capital has built a short position worth 0.51 per cent of the FTSE 100 company,

  4. Hedge funds up as industry adjusts to rising rates[more]

    Komfie Manalo, Opalesque Asia: Hedge funds have reshuffled their portfolio after nearly four weeks of rising rates as the Lyxor Hedge Fund Index was up +0.2% from 19 September to 26 (+1.1% YTD), fuelled by strong results of global macro funds, Lyxor Ass

  5. Manager Profile - How the world's hedge fund king used 'idea meritocracy' to become a billionaire[more]

    From Forbes.com: In 1982, Ray Dalio made what he calls the biggest mistake of his life. He made a bet that there would be an economic collapse stemming from a debt crisis. And he was wrong. He lost money. He lost his client's money. He had to let people go from his firm and borrow money from his dad