By Adam Laird on May 31, 2010
At HighView, we’re big fans of Tom Bradley. An industry veteran, Tom’s current focus is his no load fund company Steadyhand Mutual Funds http://www.steadyhand.com/ . Through Steadyhand, Tom is packaging his years of experience and making it available to all investors. What he has created is different. It’s plain and simple, very transparent and easy for even the most casual of investors to follow and understand. Tom also writes in the Globe and Mail twice a month and his articles are always worth a read.
In this past weekend’s article, (http://www.theglobeandmail.com/globe-investor/investment-ideas/features/the-buy-side/avoiding-benchmark-oriented-mediocrity/article1585005/) Tom reviews what he looks for in the managers he employs to run his funds. Unlike most, Tom intentionally seeks out managers who are NOT likely to track a market index. If his funds are going to stand out, his managers will have to as well. This will obviously lead to periods during which his managers will be out of step with the pack. However, Tom puts a lot of time into understanding how his managers manage money so, through these periods, he will know why this is happening.
At HighView, we take a very similar approach to choosing the managers we do for the programs we run for our clients. We look for managers that have an individual investor bias, meaning they are more focused on absolute return than realitive return. In fact, performance is only one of the “Nine P” process of review we use. We spend most of our due dilliegence time focused on the people, their philosophies, and the resulting portfolio construction and security selection processes that result. We know that our managers will not always be number one in their categories over short periods of time. However, when they are out of step, we know why. Further, we know them well enough to have confidence that they will deliver over the medium and longer term.
Far too many investors have suffered the fate of trying to chase performance without an understanding of why that performance has occured. While there is no certainty in the short term direction of markets, investment success over the longer term can certinaly be enhanced by really understanding who is investing your money, or with organizations that take the time to do that on your behalf.
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