Study examines the “quiet controversy” in the asset management business
| Oct 1st, 2008 | Filed under: Academic Research, Institutional Investing, Today's Post | By: Alpha Male |
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Ever seen a fund offering memorandum or prospectus that read something like this?:
“The manager uses a bottom-up research process supported by technical and quantitative analysis. Top-down research is also used in conjunction with computer screening to identify investment theses. The manager then uses fundamental analysis to select specific investments.”
If you think this sounds pretty typical you’re not alone. Rarely, it often seems, are managers willing to pin their hopes on only one investment style.
Generic descriptions that amount to a grab-bag of every approach imaginable are more common that we think according to a recent study by Russell Gregory-Allen and Jeffrey Stangl of Massey University in New Zealand and Hany Shawky of SUNY Albany. Their paper “Quantitative vs. Fundamental Analysis in Institutional Money Management: Where’s the Beef?” aims to put to rest what they call the “quiet controversy over who does a better job, Fundamental Managers or Quantitative Managers”.
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In other words, this description leaves those using it open to do whatever they want? Is that the purpose? Likewise, are the terms bottom and tops-up standardized enough to truly mean something? Maybe they are but different investors may perceive those definitions as meaning something very different that the writers of the copy. (Sorry, all this global financial crisis has me in a snitty mood today). DKS