But are there any specific fund manager attributes that have proven to increase the likelihood of success?
The answer is yes, according to a groundbreaking study that appeared in the Canadian Investment Review. The study, which took place over a six-year period, considered hundreds of different investment managers across different regions, and analysed how a number of different organisational and process factors affect the ability of the fund manager to produce superior results.
Of the 17 factors that were tested, four were identified as being statistically significant in explaining an investment manager?s performance:
Investment management firms that have a high degree of employee ownership are more likely to produce superior results than those that have little or no employee ownership.
This is intuitive as the greater the degree of ownership, the greater the incentive for employees to produce good performance.
Low personnel turnover
Firms that had a high degree of turnover in terms of key investment staff tended to produce inferior results when compared to those with low turnover of such staff. It was also concluded that low levels of staff turnover were positively correlated with the level of ownership. In other words, boutique firms tend to have lower levels of turnover of key investment individuals and that this manifested itself in superior performance.