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Finding a winning stock may be easy for some. However, recognising that it is a winner, and having the conviction to run it, is considerably more difficult for all but the most skilful investment managers. Contrary to conventional thinking, the overwhelming majority of fund managers do not run their winners. They do the opposite, and sell stocks too early due to an over-riding tendency to “bank their profit”.

The power of letting winners run

This research paper demonstrates that investment skill exists, introduces a way to identify it, and shows that there is almost 500 bps pa difference between the performance of portfolio managers who have skill, and those who do not. This means that asset owners and asset managers can objectively measure investment skill over the long term.

What data have Inalytics used in the analysis?

Using the Inalytics Peer Group Database, in this study we analysed 760 equity portfolios from around the world.

 

Download the full research paper below to see the results of how we measure investment skill in portfolio managers who let winners run.

Contact us for further information about how Inalytics analyse portfolios and decision making to improve the investment process and help select skilful portfolio managers.

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