We have heard both investment managers and evaluators of managers grappling with the question: How many investment philosophies should an investment firm have?
We believe a firm should be able to articulate a sound investment philosophy for every investment strategy it offers, regardless of whether that strategy is packaged as one product or several related products. An investment strategy is the application of a set of beliefs to a specific set of opportunities. A strategy is an approach for practicing a philosophy, including beliefs about internal skills, portfolio construction and risk management.
A firm with a narrow investment focus might well have only one investment philosophy. For multi-strategy firms, we think it’s perfectly acceptable for each investment strategy team within the firm to have its own investment philosophy.
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.