What is the biggest sin for an active manager?

scorpio20's picture
Rank: Baboon | 154

In a recent survey, readers of the CFA Institute Financial NewsBrief were asked, "What is the biggest sin for an active manager relative to its relationship to an investment consultant?" 44% of people said that style drift is the biggest sin, followed by 28% who considered underperformance to be the greatest sin.

Why do you think style drift is considered the biggest managerial sin by investment consultants? What do you think is the biggest sin?

Comments (4)

Nov 17, 2016

This sounds like it belongs in the Asset Management forum, not the management consulting forum. Just because both have management in the title, doesn't make them the same thing

Best Response
Nov 17, 2016

Why style drift? Because ICs are allocating a portion of their client's assets to you to fill a specific need. You aren't the only manager they allocate to so when they use you to get International Value exposure, that's what they want to get. They have other managers filling the other buckets (International Growth, Large Cap Value, etc etc.. however they break down their allocation buckets), so they don't want to see drift towards growthier names from their value guy. This is the general idea behind it. Underperformance in your style can often just be a case of your style being out of favor (ie. value in a growth cycle), although performance is always important

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Nov 18, 2016


Nov 18, 2016
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