Active management was never meant to be easy. We can’t all outperform and behavioural traps lie around every corner. Tactical asset allocation, in particular, is often set up to fail, with a small number of big decisions, made infrequently by a committee of senior people with limited individual accountability. I wrote a short piece on how - and how not - to design a top down investment process. Credits to C. Northcote Parkinson and Daniel Kahneman. Who votes we break for lunch? https://lnkd.in/eRMRq-PU
Trevor Greetham Indeed allocations should be driven indeed by data, but decided by a small group of people who understand them. And your strategies should be designed around those sets of data, so you can pick up the relevant one at any moment.
Trevor, your article reads as common (excellent) sense. Maybe common sense isn't so common?
Nice article Trevor! Well done
Ahh Parkinson’s law Trevor, coefficients of inefficiency, civil service, how topical.. ‘death by committee’.. ‘British Leyland’ .. no names but one particular multi asset team I had on my desk had at one point 120 professionals following M&A and a fairly complex committee structure to go with it, the human complexity arising was super interesting and those layers do easily grow if not checked, as funds become supertanker funds.. Checking cognitive dissonance extends into Boards and ICs as you note, critical thinking a must https://www.investmentweek.co.uk/opinion/4019079/clarion-critical-thinkers-cure-group