How analysing fund manager behaviour can boost returns

BEHAVIOUR

Peter Pierce of Atlantic Venture Management reveals how analysing patterns of fund manager behaviour can have a positive impact on returns.

Most entities who allocate capital to external managers (pension plan sponsors, fund of funds, endowments, etc) have not, for the most part, analysed the actual trade data behind the monthly returns posted by their managers, the same monthly returns used in the due diligence process to help make allocation decisions. Yet there is a wealth of information that provides insights into how a manager’s emotions or behaviour can impact return on capital, and for corporate plan sponsors, reported earnings per share. In essence, analysis of trade data over time provides a practical application of...