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(This is used by institutional investors to compare managers' performance).
The consultants typically keep databases that track the money managers' performance.
The practice also leads investors to draw spurious conclusions about their fund managers' performance.
So the next step was to measure the managers' performance after adjusting for risk.
As for "obscene compensation packages", they remain as much an affront to rational evaluations of alleged super managers' performance as ever.
At T. Rowe Price, Mr. Kennedy said he worked with the company's chief investment officer, head of research and head of trading to assess managers' performance.
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There are many possible reasons why Messrs Stansky and Kaye lost their sparkle, but it is difficult nearly impossible, perhaps to tell whether fund managers' performances should be ascribed to talent or chance.
In one sense, this is hardly surprising; professional fund managers own the bulk of stocks, so the average fund manager performance should match the index.
To be fair, Mr Petajisto's paper does suggest that there is persistence in fund manager performance so this may be possible.
You can also trace manager performance yourself.
Do you ever look at manager performance?
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com