Judging the manager’s investment process

Uncovering your own investment beliefs is a challenge on its own. Uncovering other funds’ or managers’ investment beliefs is an entirely different challenge. John Minahan’s 2008 paper discusses how to uncover an active manager’s belief system for two reasons:  “First, an active investment process is designed to exploit a manager’s beliefs about how superior performance is generated, so understanding the manager’s beliefs is central to judging the manager’s investment process. Second, I want to know how proactive the manager is about using the available tools to self-assess his or her investment process and beliefs.” His thesis  sounds: you might have more confidence in managers with an adaptive or proactive belief system. It’s refreshing to see managers actively wrestle with learning and improving using whatever framework they have developed, formal or improvised.

Paper Evaluating Active Managers: The Role of Belief Systems

About Kees Koedijk

Kees Koedijk is Professor of Financial Management and Dean of the Tilburg School of Economics and Management at Tilburg University. Kees Koedijk was the chairman of the Raad van Economisch Adviseurs (REA), an important council of economic advisors to the Dutch Parliament. In the past, Koedijk has won several awards for his research on sustainable development. He has published extensively on finance, responsible investment, and pension management. During the last 10 years he served at several investment committees of pension funds.
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