The Importance of Investment Strategy

  title={The Importance of Investment Strategy},
  author={Charles T. Howard},
  journal={Mutual Funds},
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… 
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