02 December 2009

Why Complain about Money Manager Performance?

There has been a bit of a kerfluffle about the underperformance of actively managed funds vis a vis the indices over the last few days. Some people are outraged at the rich rewards received by money mgrs for their dead weight. Others blame hedge funds for sucking all the talent out of the mutual fund business. Yawn. Here's the performance of the long portfolios of all 13f filers since Sept. 30 and for Dec. 1. This includes index funds as well as equities held by hedge funds. The averages would look different if they were cap-weighted.

Quick conclusion. On a day-to-day basis manager performance tends to cluster around the mean. Over time (in this case two months) performance really does diverge. A lot.

If you'd like to know where your guy or gal is on the chart, give us a ping.

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