Skip navigation
Wealth Management Wire
Good Vs. Lucky: Assessing Portfolio Manager Performance

Good Vs. Lucky: Assessing Portfolio Manager Performance

Portfolio managers are way more impacted by luck than they'd like to admit.

By Matthew Borin

There are three intangibles that all good portfolio managers have, says Jacques Lussier, CFA, but factor-based benchmarks are still the best way to distinguish the effective managers from the lucky ones.

Lussier, the CEO of Ipsol Capital, is a proponent of statistically reliable performance because investors often mistake good fortune for alpha.

"I believe that the performances of managers... are way more impacted by luck than we would like to admit," Lussier told Jason Voss, CFA, during a recent Take 15 interview. "Some managers have good performance because they have good process, but some managers have good performance simply because they were lucky or because of a single glimpse of genius never to be repeated again."

Since portfolio managers' outcomes are imperfect proxies for their abilities, their processes might be more illuminating to investors. Lussier looks for three qualities in particular when determining whether a manager can…

View Original Article

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish