Investment Leadership and Portfolio Management The Path to Successful Stewardship for Investment Firms

by Singer, Brian D.; Fedorinchik, Greg

Edition: 1st

ISBN13: 9780470435403

ISBN10: 0470435402

Format: Hardcover

Pub. Date: 2009-10-26

Publisher(s): Wiley

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Summary

An industry leader candidly examines the role of investment leadership in portfolio managementInvestment Leadership & Portfolio Management provides a top down analysis of successful strategies, structures, and actions that create an environment that leads to strong macro investment performance and rewarding investor outcomes. By examining how to manage and lead an investment firm through successful investment decision-making processes and actions, this book reveals what it will take to succeed in a radically changed investment landscape. From firm governance and firm structure-for single capability, multi-capability, and investment and product firms-to culture, strategy, vision, and execution, authors Brian Singer, Barry Mandinach, and Greg Fedorinchik touch upon key topics including the differences between leading and managing; investment philosophy, process, and portfolio construction; communication and transparency; and ethics and integrity. Leadership issues in investment firms are a serious concern, and this book addresses those concerns Details the strong correlation between excellence in investment leadership and excellence in portfolio management Written by a group of experienced professionals in the field, including the Chairman of the CFA Institute Board of GovernorsUnderstanding how to operate in today's dynamic investment environment is critical. Investment Leadership & Portfolio Management contains the insights and information needed to make significant strides in this dynamic arena.

Author Biography

BRIAN SINGER is Chief Investment Officer of Singer Partners and Chairman of the CFA Institute Board of Governors. Previously, he was head of global investment solutions at UBS Global Asset Management (formerly Brinson Partners, Inc.), responsible for asset allocation and currency strategies. Singer is also Emeritus Board Member of the Research Foundation of CFA Institute and an advisory board member of the Journal of Performance Measurement. He is a recipient of the 1991 Graham and Dodd Award and a 2001 recipient of the Dietz Award. Singer holds an MBA from the University of Chicago.

GREG FEDORINCHIK is head of investor solutions at Mesirow Advanced Strategies, Inc., an institutional fund of hedge funds firm based in Chicago. Prior to joining Mesirow, he was a senior strategist with the global investment solutions team at UBS Global Asset Management (formerly Brinson Partners, Inc.) and a member of the asset allocation and currency committee. Fedorinchik holds an MBA from the Kellogg School of Management, Northwestern University.

Preface	p. xi
Acknowledgments	p. xvii
Characteristics of Successful Asset Management Firms	p. 1
You Can Take the Boy Out of the Culture, but You Can't Take the Culture Out of the Boy	p. 3
Size Matters, but Not in the Way Most People Believe	p. 7
Governance: The Guardian of an Investment-Driven Firm	p. 12
Fostering Collaborative Freedom: Everybody is a Peer	p. 19
Integrity: An Unquestionable Characteristic of Success	p. 23
Conclusion	p. 25
Building a Cathedral: A Framework for Turning the Mission into Collective Action	p. 27
A Framework for Effective Leadership and Management	p. 28
Establishing and Living Organizational Values	p. 29
Creating Mission and/or Investment Philosophy Statements	p. 31
Strategic Goals and Key Performance Indicators	p. 33
Conclusion	p. 37
Building a Meritocracy: Understanding, Evaluating, and Rewarding Employee Contributions	p. 39
Performance: A Deeper Dive	p. 39
Horizon: The Fallacy of the Three-Year Track Record	p. 40
Performance Analysis: Practically Speaking	p. 45
Top-down and Bottom-up Approach to Determining Performance	p. 48
Designing Your Rating System to Help Make the Difficult Decisions	p. 51
What Does the Performance Score Really Mean?	p. 53
Criticality: A Deeper Dive	p. 53
Merit Zones: Putting It All Together	p. 57
Communication of Performance and Criticality	p. 59
Values and Compensation	p. 64
Conclusion	p. 67
Investment Philosophy and Process: A Lofty Cathedral Needs a Deep Foundation	p. 69
The Importance of Investment Philosophy and Process in Investment Organizations	p. 69
Investment Philosophy: Core Beliefs	p. 70
Investment Process: Control and Anarchy	p. 73
Avoiding the Pitfalls of Behavioral Biases	p. 78
Conclusion	p. 83
Investment Process in an Evolving World	p. 85
Implementation Overview: The "How" of the Investment Process	p. 86
Fundamental Valuation	p. 88
Market Behavior and How It Challenges the Fundamental Investor	p. 90
Team Behavior: Lessons for the CIO from Jelly Beans and Freud	p. 118
Portfolio Design	p. 127
Conclusion	p. 129
Communication for Superior Client Outcomes	p. 131
The Problem: Human Nature	p. 133
A Classic Tale	p. 134
Individual Investors, the Impact of Performance Chasing	p. 137
Are Institutional Investors the "Smart Money?"	p. 137
The Reality of Investing in Equities	p. 139
The Mathematics of Recovery	p. 142
Dilemma: Investment Firm or Distribution Shop?	p. 143
The Importance of Culture	p. 145
Sales and Marketing in an Investment Firm	p. 146
Conclusion	p. 149
Appendix: Client Communication in Extreme Market Conditions	p. 149
Where are the Clients' Yachts?: Reasonable Fee Structures	p. 159
The "Gamma Trade"	p. 161
Anatomy of a Blowup	p. 167
Catch 22	p. 168
Faults of Existing Fee Structures	p. 170
Our Recommendation: High Integrity Fee Structures	p. 178
Conclusion	p. 186
Final Thoughts	p. 187
Characteristics of Great Asset Management Firms	p. 188
It Starts with a Shared Mission and Values	p. 188
True Meritocracy	p. 189
Avoiding the Pitfalls	p. 190
For Successful Client Outcomes: Communicate, Communicate, Communicate	p. 192
It's All about Incentives	p. 193
Integrity	p. 193
Notes	p. 195
Bibliography	p. 201
About the Authors	p. 205
Index	p. 207
Table of Contents provided by Ingram. All Rights Reserved.