Folks even and/or especially institutional investors confuse their perception of time with the market's time, get discouraged and decide to try something different.
A fund's manager can only go into the investment policy committee, hear some smart-ass board member parrot a line he heard on the course "I don't care about Sharpe ratios, we can't eat risk adjusted returns"* so many times before he says okay, we'll try this triple-leveraged commodity options program.
And they usually do it near a turning point.
From the Wall Street Journal, Jan 8, 2017:
Magic Eludes Bubble-Caller Jeremy Grantham, as Assets at GMO Drop by More Than $40 Billion
Investor Jeremy Grantham’s money management firm is cutting its workforce amid client defections
Investors are bailing on Jeremy Grantham once again.
Mr. Grantham, co-founder and chief investment strategist of Boston money manager Grantham Mayo Van Otterloo & Co., has been out of step with the market several times during the firm’s four decades. GMO has usually rebounded, with the 78-year-old investor earning acclaim with asset-bubble calls ahead of Wall Street busts in 2000 and 2008.
Lately, though, the firm is going through one of its roughest periods. Assets under management have tumbled to about $80 billion, according to someone close to the matter, down from a peak of $124 billion in June 2014. An acting chief executive has been running GMO for more than six months and the firm fired about 10% of its workforce, cutting some 65 jobs, in June last year
Bearish about what it sees as high valuations of U.S. stocks, GMO’s flagship mutual fund, the GMO Benchmark Free Allocation fund, has largely missed out on the latest rally in U.S. stock indexes.
The fund held about 7% of its assets in U.S. stocks as of the end of September, with 27% in cash, 16.9% in developed markets outside the U.S. and 20% in “alternative” strategies such as global “macro” investing, according to the firm.
The GMO fund also had over 20% in emerging-market stocks and bonds—an investment that did nicely earlier in 2016 but has been under pressure in recent months.See also, because we know you're curious:
As a result, the GMO Benchmark Free Allocation fund rose 3.4% in 2016, compared with a gain of about 5.7% for its peers, according to fund tracker Morningstar Inc., and a gain of 12% for the S&P 500, including dividends. The firm says the fund tries to beat inflation, which rose less than 2% over the past year.
“GMO has taken a lot of risk off the table, they think a lot of areas in the market are overvalued,” says Leo Acheson, a senior analyst at Morningstar. “They’ve definitely seen outflows, but they’ve been in this position before and looked bad for periods” before rebounding, he said....MORE
Feb 2010
"Grantham’s ‘Horrifically Early’ Calls Challenge GMO"
March 2014
How Good Is Jeremy Grantham's Forecasting Record?
His strong pessimism drives GMO managed funds toward the most stable (large capitalization) value stocks, and these funds have performed fairly well (reflecting perhaps a value premium rather than market timing).
*I've mentioned a few times the original old market pro's version is:
"...as a mentor once said "You can't eat relative performance" meaning a loss is a loss even if it is smaller than your benchmark..."
or:
"...old traders saying "You can't eat relative performance."
