Does your investment philosophy stand up to evaluators’ scrutiny?

Consultants and asset owners who evaluate your firm need to understand your investment philosophy. A good investment philosophy statement can help them do that by providing starting points for further conversation.

Finding out whether your investment philosophy is truly defensible requires an in-depth conversation, perhaps many conversations, as well as observation of the investment process in action. In our experience, few investment professionals can cut to the chase in these conversations. The more likely situation is that the evaluator must work to uncover the professional’s tacit knowledge, something the professional may not be able to identify or articulate without thoughtful questioning and dialogue.

We propose three criteria you can use to test your investment philosophy statement ahead of assessment by actual evaluators:

  • It should be a statement of belief as opposed to process, objectives, etc.
  • It should avoid logical fallacies, such as non sequiturs and mythology presented as fact.
  • It should provide enough content about the philosophy itself to constitute a starting place for in-depth exploration.

To learn more about the benefits of investment philosophy, we invite you to read our recent paper, “Rethinking Investment Philosophy,” by John Minahan and Thusith Mahanama.* Just click on the link below to read an executive summary.


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