Investment Management Roundup – Week Ending 4.17.15

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“The Real Point of Active Investing: Outperforming the market is not the goal”
Marshall Jaffe | Managing Partner, Jaffe Asset Management | ThinkAdvisor | | 4.6.15

The Real Point of Active Investing

“‘… The goal of active investing is to outperform the market.’
… I cannot count how often I have seen variations on the theme of this apparently sensible observation. There certainly doesn’t appear to be much, if any, argument with its conclusion. It is so ingrained in our thinking and so seemingly obvious that I’ve never come across anyone who was willing to claim that the goal of active investing has nothing to do with outperforming the market.” So I’ll do it: ‘The goal of active investing has nothing to do with outperforming the market.’”

“Designing an Investment Organization for Long-Term Investing”
Dr. Geoff Warren | Research Director, Centre for International Finance and Regulation | CIFR Working Paper No. 041/2014 | | October 2014

Long-Term Investing“We address how investment management organizations might be built to successfully pursue long-term investing. A variety of recommendations and suggestions are put forward that address four building blocks: organizational; incentives; investment approach; and discretion over trading. A key message is the need to manage the principal-agency issues that occur across multi-layered operations, with the aim of building alignment with investing for the long run. Investment approaches should be focused around the drivers of long-term outcomes, rather than short-term price movements.”

“Star fund managers fading as active management loses luster”
Bloomberg News | InvestmentNews|| 4.11.15

Fidelity’s Peter Lynch “The Hotchkis & Wiley Small Cap Value Fund has returned 35% a year since the bull market began in 2009, the top-performing U.S. stock fund during the period.”

Never heard of James Miles and David Green, the fund’s managers? That’s no surprise. They’re part of a group whose visibility is diminishing fast: famous stock pickers.”


“Trust comes with GIPS compliance: A common language for firms to communicate with investors”
Heda Bayron | Communications Manager, CFA Institute | AsiaAssetManagement | | April 2015 Vol. 20 No. 4

A common language for firms to communicate“Early this year, Taikang Asset Management Co Ltd (Taikang AMC) became the first insurance-owned asset management firm to claim compliance with the Global Investment Performance Standards (GIPS) in China. The GIPS standards are a set of universally accepted standards that allow investors to compare and evaluate the performance of various asset managers. For a company like Taikang AMC that is looking to expand business with local asset owners such as pension funds and foreign institutional investors, the benefits are clear.”


“The indomitable benchmarks!”
Salil Mehta | Statistical Ideas | | 4.12.15

The indomitable benchmarks“Active fund managers don’t seem to be getting a break now, especially since their performance hasn’t measured up for more than a decade. This article continues to clarify this indefensibly calamitous position they are in. We shed new light on how one can mathematically verify how weak these investment managers are, by also using more conservative statistics measures and more closely considering the selection of solid benchmarks themselves.”


“The Dark Truth Behind California’s Strangest Tax Exemption”
Esther Ingalls-Arkell | | 4.15.15

Strangest Tax Exemption“… There are lots of weird exemptions you can get from California; for instance, the state does not require people to pay income tax on any money they get as a reward from a crime hotline, so long as the reward is offered by a government agency or a nonprofit charitable organization recognized by the state. You can also keep any money you get as compensation for false imprisonment. But there was one exemption that really stands out — California residents are exempt from tax on any ‘Ottoman Turkish Empire Settlement Payment.’ It seems comically antiquated… until you learn the dark story behind this odd bit of tax code.”

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