Investment Management Roundup – Week Ending 2.6.15

Share on FacebookShare on LinkedInShare on TwitterShare on Google+Share on Email

This week’s Investment Management Roundup highlights a new video where Professor Martijn Cremers talks about active share — a concept we wholeheartedly endorse. Also included are links to articles that tackle diversification, the abundance of overconfidence in the investment industry, and two new papers on why color choice matters in investment management marketing material and getting your ducks in a row as your firm tackles GIPS® updates. Happy reading!


“Professor Martijn Cremers Talks about Active Share”
Touchstone Investments | | Video | 1m48sec | 1.20.15

Professor Martijn Cremers Talks about Active Share“Active share is a relatively new metric. It measures the proportion of a fund’s portfolio holdings that are different than its relevant benchmark. If a fund is 100% like the benchmark in securities and weights that fund would be deemed to have 0% active share. Conversely, a fund with holdings that differ entirely from the benchmark would be given a score of 100%.
Why is this important? Funds that closely resemble their benchmark will find it difficult, if not impossible, to outperform that benchmark. Finding that fund that has the wherewithal to outperform its benchmark is becoming increasingly difficult.”

Watch the video at:

“Confidence game”
Tom Brakke | Thomas J. Brakke, LLC | | 1.20.15

Confidence game“We are behaviorally disposed to overconfidence by our very nature — and, here’s the kicker — the norms and incentives of the organizations that we are part of (and those that we do business with) push us further in that direction.”

“Diversification: From Free Lunch to Greedy Fee-Eater?”
Elizabeth Pfeuti | Chief Investment Officer Magazine | | 2.4.15

Your expectation of free lunch“Investors with the best intentions of diversifying the risks in their portfolio may well be paying ‘astonishingly high fees’ and negating any potential upside, two researchers have claimed.
In a paper named ‘Fees Eat Diversification’s Lunch’, William W. Jennings and Brian C. Payne from the US Air Force Academy, Colorado, set out the findings of their investigation. The authors highlighted how much investors—from the smallest to the largest—are paying and the effects it has on their portfolios.”


“First Impressions Matter: The Importance of Color in Investment Management Presentations and Reporting”
Assette | |1.29.15

First Impressions Matter“In this paper, we provide practical information and concrete actions investment firms can take to exploit the evocative power of color in client reporting and marketing presentations. The first step is likely to be convincing your CEO that color is more than a ‘design thing’ — it is a critical part of the message itself.

If your firm uses behavioral finance principles in its research and portfolio construction processes, then the idea that color is a legitimate sensory trigger affecting mood and decision-making shouldn’t be too much of a conceptual leap.”
Download the full paper at:


“Are Your Firm’s GIPS® Materials Current?”
Amy Jones, CIPM |Founder/Principal, Guardian Performance Solutions LLC | |1.16.15

Amy Jones“At a minimum, GIPS-compliant firms are required to update compliant presentations with year-end information. While it may appear that adding the most recent year’s annual returns to the presentation is all this entails, there are many other elements of the presentation that are subject to change over time and may require attention to ensure presentations remain complete and accurate.
Below are some of the best practices that should be considered when updating compliant presentations.”

Download the full paper at:


“Masculinity, Testosterone, and Financial Misreporting”
Jia, Yuping; van Lent, Laurence; and Zeng, Yachang | August 25, 2014 | Journal of Accounting Research, Forthcoming |

Glad to see these accounting researchers are facing the facts …

Facial masculinity “We document a positive association between CEO facial masculinity and various misreporting proxies in a broad sample of S&P 1500 firms during 1996–2010. We complement this evidence by documenting that a CEO’s facial masculinity predicts his firm’s likelihood of being subject to an SEC enforcement action. We also show that an executive’s facial masculinity is associated with the likelihood of the SEC naming him as a perpetrator. We find that facial masculinity is not a measure of overconfidence. Finally, we demonstrate that facial masculinity also predicts the incidence of insider trading and option backdating.”

Download the full paper at:

Cartoon of the Week: It all ties together …
Pensions and Investments |


Note: Full access to some of the articles above may require subscription.

Like what you read? Know a colleague who’d like it, too? Share the news via the social icons at the top of this post.

Want to learn about how to automatically create sales pitch books, client reports and provide online access to clients and consultants? Visit

Add a comment

Your email address will not be published. Required fields are marked *