The Importance of Investment Strategy

@article{Howard2010TheIO,
  title={The Importance of Investment Strategy},
  author={Charles T. Howard},
  journal={Mutual Funds},
  year={2010}
}
Superior stock picking is common among active equity fund managers. The reason stock picking skill is not detected by many performance studies is over-diversification, which overwhelms the superior performance of top holdings. Managers who do not over-diversify outperform by an astonishing 6% to 12% annually. The style grid is a significant contributor to this over-diversification problem. In addition, the grid does not help investors identify successful active managers, since stock… 
Behavioral Measures of Expected Market Return
Investor behavior is an important determinant of individual as well as market-wide equity returns. In this study, I extend the behavioral investing literature by introducing Strategy Market
Benchmark-adjusted performance of US equity mutual funds and the issue of prospectus benchmarks
TLDR
The prospectus benchmark can mislead investors about fund’s relative performance and ranking, so any reference to performance in a fund's prospectus should be treated with caution.
Corporate Governance and the Shareholder: Asymmetry, Confidence, and Decision-Making
Corporate Governance and the Shareholder: Asymmetry, Confidence, and Decision-Making by E. John Buchanan MBA, Nova Southeastern University, 2006 BBA, Florida Atlantic University, 2003 Dissertation

References

SHOWING 1-10 OF 62 REFERENCES
Portfolio Concentration and Investment Manager Performance
This study examines the relationship between investment performance and concentration in active equity portfolios. Active management is dependent on the success of two important components in the
The Case for Whole-Stock Portfolios
For more than 20 years pension and endowment funds have used multiple active investment managers with complementary styles to manage their U.S. common stocks. Theory tells us that the
The investment value of mutual fund portfolio disclosure
This paper shows that publicly disclosed mutual fund portfolio holdings have investment value. Our approach is based on the intuition that an overweighting by successful managers, or an
Matter of Style: The Causes and Consequences of Style Drift in Institutional Portfolios
The equity style orientation of an institutional portfolio has a large influence on its yearly returns. This paper analyzes the causes and consequences of portfolio style drift among U.S. equity
Can Mutual Fund Managers Pick Stocks? Evidence from Their Trades Prior to Earnings Announcements
Abstract Recent research finds that the stocks that mutual fund managers buy outperform the stocks that they sell (e.g., Chen, Jegadeesh, and Wermers (2000)). We study the nature of this
Measuring mutual fund performance with characteristic-based benchmarks
This article develops and applies new measures of portfolio performance which use benchmarks based on the characteristics of stocks held by the portfolios that are evaluated. Specifically, the
Acting on the Most Valuable Information: 'Best Idea' Trades of Mutual Fund Managers
In this paper, I identify "best idea" trades of fund managers. These trades account for about 30% of fund volume and outperform benchmarks and other fund trades by as much as 47 basis points per
The Value of Active Mutual Fund Management: An Examination of the Stockholdings and Trades of Fund Managers
Abstract We investigate the value of active mutual fund management by examining the stockholdings and trades of mutual funds. We fine that stocks widely held by funds do not outperform other stocks.
Mutual Fund Performance: An Empirical Decomposition into Stock-Picking Talent, Style, Transactions Costs, and Expenses
We use a new database to perform a comprehensive analysis of the mutual fund industry. We find that funds hold stocks that outperform the market by 1.3 percent per year, but their net returns
On the Industry Concentration of Actively Managed Equity Mutual Funds
Mutual fund managers may decide to deviate from a well-diversified portfolio and concentrate their holdings in industries where they have informational advantages. In this paper, we study the
...
...