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Striving for Consistency

28/02/2019

Many investment managers will say as part of their pitch to a potential investor that they aim for consistency as, if they can deliver “average” performance consistently, over time their performance will trend towards being first quartile. In other words by avoiding mistakes they will end up delivering excellence. That sounds great in theory but how do discretionary investment managers (‘DFMs’) actually perform? In this article we examine two sources of return dispersion: that between DFMs and that within DFMs and find evidence that, on average, the internal dispersion of private client outcomes within a single DFM is at least as high as the dispersion of returns between DFMs. Choosing the right DFM is only part of the answer.

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