NOW AVAILABLE
The Book That Is Changing How Fund Assessment Is Being Conducted
Skill Versus Luck provides the facts and analytic insights necessary to enhance your equity fund assessment and allocation decisions. It is a must read for everyone involved in active management.
It's all about skill,
isn't it?
Yet, little is known about SKILL –
Who has IT? How is it measured?
Defining Skill
SKILL = EXPERT JUDGMENT + INVESTMENT PROCESSES
“Performance is not a measure of investment skill. It is a measure of outcome. In investment management performance can be a function of skill but also of luck. We are more interested in how the performance outcome was achieved and in determining the characteristics that drove the outcome. In allocating capital to asset managers, we want to be paying for skill, not luck.”
- Corrado Tiralongo, CIO, Counsel Portfolio Services
Today's Challenges
FOR IDENTIFYING SKILLED INVESTMENT MANAGERS
Skill
Direct measures of skill are absent throughout the majority of the industry. Sketchy inferences of skill are based on fund outcomes like returns and holdings.
Process
There is little analytic confirmation of processes today. High-level schematics and verbal descriptions are relied upon to understand a fund’s repeatability.
Future Alpha
Which equity funds have a better than average likelihood of outperforming over the next five years, ten years, and more? There is no simple answer.
The Skill Library
LEARN HOW TO IDENTIFY SKILLED MANAGERS
Where To Look For Skilled Equity Managers
SMART THINKING ESSAY SERIES, ISSUE 6
Skepticism regarding the existence of skilled equity fund managers is understandable. In most years the majority of actively managed equity funds underperform. Among those that do outperform few manage to do so for 3, 5, or 10 years in a row. It is no wonder why so many institutional investors have grown timid about allocations to actively managed equities.
Articles
WRITTEN BY MICHAEL ERVOLINI
Mike has authored dozens of articles about active management appearing in both academic journals and trade outlets, including: The Journal of Portfolio Management, The Journal of Investing, Institutional Investor, Pensions & Investments, Investments & Pensions (Europe), The Financial Times, and Forbes.
Essays About Skill
SMART THINKING & BEHAVIORAL MATTERS ESSAY SERIES
Smart Thinking & Behavioral Matters are a series of essays about evaluating manager skill and the application of Behavioral Finance written specifically for professional investors and portfolio managers.
Skill Commentary
INTERVIEWS ABOUT THE LATEST IN ACTIVE MANAGEMENT
This section is coming soon. Stay tuned.
MICHAEL A. ERVOLINI
AUTHOR AND ACTIVE MANAGEMENT EXPERT
The ideas expressed on this website are developed and/or curated by Michael Ervolini. Mike has spent his entire 35+ year career leading efforts to improve and strengthen active management.
GET THE LATEST FROM SKILL VERSUS LUCK
The multi-trillion dollar active management industry is predicated on the idea that managers have skill – yet little is known about it – Who has skill? How is it measured? This website is dedicated to finding answers to the questions surrounding skill.
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