Active Managers

“This is the only business where you don't need an average. Somebody needs an average phone. Somebody needs an average car. You do not need an average manager. Vanguard is happy to do it for you for two basements.”

“By definition, they sum to the market minus the cost of transactions and minus the fees that they charge. And the guys at the bar watching you, they sum to zero. There are no costs. So they will beat you. As a group, they must outperform you.”

“I think people will be talking about public markets and the potential for outperformance from active managers because you're teed up pretty well to have a good period of time for active managers.”

“I do think that we will see a return to Active managers that are able to discriminate true fundamentals, in part because I think that the cost of capital is just gonna rise and all the funny money of the past 10 years is, is gonna wash out.”

“It probably won't do as well, relatively speaking, over the next five to 10 years as it did over the last five to 10 years relative to good active managers. We believe that. We'll see.”

“And I think, again, what's been interesting is that by having that sophistication in house, it actually makes us better partners. It's been fascinating to watch how the relationships with our active managers globally and even domestically have really improved.…”

“We talked about the long feedback loops and investment management and how that leads to a set of suboptimal behaviors. A lot of groupthink, a lot of fear of failure or career risk, and so people, as a result, are afraid to stand out or do something different, …”

“One of the ways we can measure that is to look at the standard deviation of excess returns, right? So alpha, right? So excess returns. So, so you'd imagine and if you'd imagine If you're an active manager, what you want is a big fat bell shaped distribution, r…”

“There's not any one answer, but in general, we think if you're going to be investing in a way that is an active manager, you need to be different than an index. So you don't end up with just an expensive index. And the way that you most frequently get there is…”

“The biggest information for people who are interested in the profession and for people who are looking for a good manager is the data documenting the inability of active managers to outperform other brilliantly talented, fully informed, Fabulous equipment, act…”

“I think there's a research study this past year that showed that generally speaking, active managers are quite good at buying securities. They're just really lousy at selling them.”

“When you look at higher fire decisions, there's a number of higher fire decisions out there for active managers, where you fire the incumbent because he has a, you know, significantly bad three, five year return. You hire the new manager based on good past per…”

“Because even our active funds, which have done very, very well, go three and five years out of favor, as all active managers do.”

“Indexing does not set price. So indexing is a mimicking strategy of active managers.”

“I think the world will continue to get harder for active managers as far as a business is concerned. But if you're a stock picker, if you're an active manager and you're an individual stock picker, the world's getting better for you because less people are doi…”

“We weren't tactical. We knew how hard it was just to find active managers that could consistently do it. The idea that we were going to be able to pull this off in Madison, Wisconsin didn't seem terribly realistic, and if I did that, then I was betting on team…”

“GPF's brand name active managers portfolio delivered zero ultra net of fee. Over almost 20 years of GPF history.”

“Last year, GPF made a very clear, explicit statement to our active managers that GPF expects all our active managers to integrate ESG into their investment analysis and decision making, and also, we Choose the active managers who control the negative externali…”

“Even if the other one of our active managers build the portfolio, which perform the better short term, but those companies in their portfolio is actually producing a lot of negative externality, which damage the long-term sustainability of the environmental so…”

“There's a lot of time we observe their stewardship team or like engagement manager go to meet their CEO without even knowing whether their fund actually owns that company because the fund manager trade in their own discretion.”

“I think there is a tipping point in that we're nowhere near it. It probably is somewhere past 80 and before 95. I'd be very surprised if we ever get there, because as you approach that point, fewer and fewer dollars are managed actively, and it should become e…”

“One of the obnoxious questions we asked Ask the audience is, how many of you think you are better than average at finding active managers? The surprising thing was, I think, 18% of the audience said they did not think they were better than average.”

“We need to have a level playing field where active managers can compete with passive and get paid for their performance. Because if they don't, I think over time, active is just going to continue to lose money, which has been the case and continues to be.”

“Whereas you go to the US Market is a lot of active managers in there. And on average, the whole market is paying fees, but not generating alpha.”

“When Warren looks at this, he's looking at the entire universe of active managers, and saying that if you take all these people together, and they charge fees, together they make the market, you charge fees, and you're going to lose. And he's absolutely right.”

“For an active manager that's in equities, there's no excuse why you can't get the data, because it's very simple to do it. There's tons of ways. It doesn't cost much in this day and age with data to do it.”

“In the public markets, companies are going to be sold indiscriminately in the same way that they're being bought indiscriminately. So I think that there is a big structural issue. I think that similar as we looked at vaccines when they were out of favor, today…”

“Add that up, that's somewhere around two percent has to be recovered just to keep up with the market. So two percent of eight percent is 25%. You have to beat the competition by 25%, and they know everything you know as soon as you know it, and you can only bu…”

“And I don't know what it would be, but it's certainly more than half the people would have to quit. Probably more than three quarters would have to quit. And my own guess would be somewhere around 80, 85% would have to quit just because it doesn't make sense a…”

“I'm waiting for the day when the key is to have staying power to last, is when, you know, the machines or the indexes are 95% of the market. Then you'll make money hand over”

“I think one of the reasons that active managers underperform consistently is because everybody's doing the same thing. They're all approaching the market from the same perspective. What we have found is more times than not, if you're just looking for high qual…”

“So we looked at all active managers in the database. There were 2000 that had at least a 10 year track record. And of those 2000, 50% of them beat their respective markets, whether it's EM, small cap, bonds.”

“For the most part, managers don't do anything different to justify an active management fee. Most managers are all about protecting their assets. So they're going to run a hundred stock portfolio. They're going to buy the high quality, wide mode business selli…”

“A lot of active managers will leave because it is getting so much harder to have a competitive advantage. But the ones who have behavioral alpha advantage, you know, where they actually are looking at their own behavior and saying, I want to continuously impro…”

“I see managers, it's like I look at x-rays all day long of different managers, and I see a lot of skill. It's quite rare that I see somebody where you're like, oh god, you should really find a different occupation. Usually there's something to work with”

“The batting average for our clients was right around 51%. This is on an alpha adjusted basis, so the top 10 positions was 57%, next 10 was 55, next 10 Was 52, and then it went into, right after 30, it sort of went into randomness. Basically, it was a coin flip…”

“If we as active managers want to survive, we need to do what we're good at, which is picking good stocks, and not diluting ourselves with portfolios of 100 plus stocks. If we can pick 30 good positions, 30 may not be the, there's no magic number here, it's gon…”

“If you look at it on an asset weighted basis, the numbers go, they're not quite 50, but they get into the mid to high So it's a temp called a 10 or 15% uplift on that percentage basis.”

“They found that in markets where the Explicit indexing was highest Active managers often did the best”

“The small variance and performance of active managers, part of that's also a function of the volatility being low. And we can demonstrate that. So, you know, it's very difficult to distinguish yourself either favorably or unfavorably when the volatility of the…”

“And so when you look at, if you just do a an adjustment for the performance and passive product, just take the S and P and look at when people entered and exited as a proxy, or look at volumes as a proxy for when people entered and exited, they actually haven'…”

“Tax efficiency creates, you know, an additional 150 to 200 basis At this point, annual hurdle for every active manager in the portfolio. That's what you can lose through turnover, and it can get worse than that.”

“Why the fuck are we apologizing for active managers when all we really need to do is get clients the right exposure in these asset classes, and then the decision making is not, did we back secretariat or a glue horse? Then the question is like, do we own too m…”