From Institutional Investor, April 10:
Essentia Analytics has found a link between a manager’s past skilled investment decisions — not performance — and higher relative returns in the future.
A crack is growing in the language of the disclaimer stamped on every fund: past performance is not indicative of future returns.
New research shows that there is a statistically significant relationship between a portfolio manager’s past decision-making performance and future returns. Of course, returns that managers may have generated a year ago, still do not signal what they will deliver a year from now.
The research team at Essentia Analytics, which has made a business out of helping active portfolio managers get a handle on their behavioral biases and generate better returns, found that an equity portfolio manager who has made skilled decisions over the last year is 1.51 times more likely to outperform their benchmark than a manager who has not. Essentia will publish a report on the research on Thursday.....
....MUCH MORE
As cross-asset analyst John Normand wrote in his last - after twenty-four years - research note for JPMorgan:
How to time mostly efficient markets ("Tactical position-taking assumes one can time the market to outperform the benchmark, due to some combination of these factors: (1) markets are partially efficient; (2) some institutions have access to broader information sources than others; and (3) some analysts are better arrangers of a mosaic of even fully public information.")
Normand is now head of investment strategy at A$315 billion AustralianSuper.
