FTfm editor Chris Newlands talks to Inalytics’ Graham Dixon about recent events in the transition management industry.

Inalytics’ quantitative measures of skill are to be incorporated as part of Towers Watson’s due diligence process for researching equity managers. This inclusion of Inalytics’ measures of skill is intended to provide Towers Watson’s research team with an additional resource to help identify skilful equity managers.

Inalytics helps make the link between an investment process and performance. This is done through analysing the results of every decision a manager takes to develop an accurate picture of their investment skill. By demonstrating managers’ skill in three key areas: finding winners, knowing when to sell and holding winners; Inalytics helps facilitate an effective dialogue over the level of skill behind an investment process.

The results of this analysis will be compared to a global database of over 800 portfolios which Inalytics has assembled. By comparing a manager against this database, asset owners will be clearly able to see if a fund manager’s skill differentiates them from their peers.

 

Inalytics Research Paper 04 demonstrates how misleading track records are as an indicator of skill. We provide evidence that even Fund Managers with no skill in stock picking have still been able to outperform the standard Australian equity benchmark.