The greatest threat to the future role of professional fund investors is not robots or regulators; it is information overload. There are tens of thousands of unique funds available for investment.
Active investment managers have the opportunity to manage money more freely today than anytime in the last twenty-five years. Considering the proclamations of death and disaster for active management at the hands of the ‘passive’ interlopers, this statement may sound misguided if not an outright misstatement of fact.
I am ruining what was my favorite neighborhood restaurant. I saw one of you there the other night (dear reader) and, although I am happy you had an enjoyable meal, I wish I hadn’t told you or, frankly, anyone else about it.
When choosing managers or funds, there is a growing gap between what selectors say and what they do. Their rhetoric covers four ‘Ps’: philosophy, process, people and performance. But their practices too often focus on past performance
Many professional investors will not consider investing in a fund until they ‘see the whites of the portfolio manager’s eyes’ and ‘press the flesh’. Despite all the technological advances that have made remote communication seamless, it is as important as ever to meet in person.
We will be discussing ‘post crisis’ evolution of fund/manager selection and what analysts are looking for from asset managers now.
With all of the excitement and noisy positioning around Newcits, hopes for broad adoption and strong inflows are sky high. But don’t confuse motion with progress. Without an evolutionary leap beyond dependence on an outmoded asset allocation framework, this whole thing is going nowhere in a big way.
The manager meeting is the crux of the selection process. For selectors, it is the link between a fund’s historical record and its future potential, by understanding the direction a manager is likely to take the fund.