Watch our five-minute video to learn how it works.
By Clare Flynn Levy
Clare Flynn Levy is CEO & Founder of Essentia Analytics. Prior to setting up Essentia, she spent ten years as a fund manager, in both active equity (running over $1B of pension funds for Deutsche Asset Management), and hedge (as founder and CIO of Avocet Capital Management, a specialist tech fund manager).
There’s one thing that all good fund managers have in common. Can you guess what it is? After a decade as an equity fund manager, followed by another decade working with hundreds of other equity fund managers, I know the answer: They’re all skilled decision-makers.
That may sound obvious, yet investors still tend to select managers based on their historical returns — not their decision-making skill — effectively ignoring the disclaimer on every investment ad that “past performance does not guarantee future returns.” The kicker is that, unlike past performance, past decision-making skill does have predictive power.
If that piques your interest, I invite you to check out the five-minute video below. It covers:
- How portfolio manager decision-making skill is measured
- How it’s used in fund selection
- The link between past skill and future investment returns
- How you can start assessing your skill — or your managers’ — right now
