Acuity Volume 53: Star manager supernovas


In this issue of Acuity, we look at how persistently skilled fund managers are a very rare commodity, hard to identify in advance and hard to live with over time. Anecdotes and examples of great managers are often used to justify active management, yet even some of the truly ‘great’ managers have failed to live up to their billing. Like the laws of physics, where many big stars eventually reach their evolutionary end in a supernova, the rules of efficient markets, the zero-sum game where losers must fund winners, investment costs and poor investor behaviour have a similar impact on those labelled as ‘star’ managers. 

In today’s investment space, taking these risks is unnecessary, stressful and the odds of them paying off are low. If you stick to sensible market risks captured by systematic funds, then sensible longer-term returns should follow.

Have a read and let us know what you think.