What are the Chances of Finding an Active Manager with Skill?

via What are the Chances of Finding an Active Manager with Skill?

Great piece by Joe Wiggins at Behavioural Investment.

Taking Joe’s probabilities, and assuming one creates a long-only portfolio of those managers deemed as having skill we would hold a portfolio comprising only 44% (19.5% / (19.5% + 24.5%) skillful managers and therefore likely under-perform the index!

We would need to raise our manager selection success rate to 70% (all else remaining the same) to get us to a portfolio comprised 50% of skillful managers!

 

 

 

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