“It doesn’t mean that they are not going to underperform when things are going badly or when you have things like a natural disaster which you just can’t forecast, but it’s the way they continue to run their process, continue to think about what’s going on, and apply that without panicking or selling at the inappropriate time.
The method that S&P uses to find the best fund managers has been in place since 2007. Milton says that examining award-winners’ performance reveals that “generally speaking, particularly in the major asset classes, they’ve all outperformed their benchmark, particularly over three years and five years, and with generally lower or similar volatility to the benchmark”.
“And they’ve also outperformed the median manager over this period, in their peer group,” she says.
“Over one year you can see the performance is more dispersed relative to benchmark and relative to the peer-group median.
“In the shorter term you’ve got to expect that all fund managers – whether they’re good or bad – will underperform at some point, but that performance will come back over the longer term.”
Details of the S&P awards methodology and comprehensive coverage of all 2011 award winners is in the November edition of Professional Planner – out now. CLICK HERE to subscribe
Rubbish. It’s about having the correct structure, correct asset allocation and the client displaying the correct behaviour.
There is no statistical evidence for the persistance of outperformance. None.