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Rekenthaler Report

Institutionalized

What do you call a professional investor? An amateur who gets paid.

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Be Different ... But Not Too Different
From FundFire, an e-service that follows trends in institutional investing: "Be Consistent Or You're Fired, Managers Told."

That caught my attention because the last that I heard, the trend in institutional investing was to be inconsistent. The '90s featured searches for investment managers who conformed to strict style definitions and who therefore could be measured against narrow and appropriate benchmarks. The next decade brought a backlash. When most of the style managers who were hired ended up trailing their benchmarks, the new pitch became for freedom. Don't limit genius. Don't restrain managers by forcing them to buy certain types of stocks, or even stocks at all. Give them a broad mandate and let them do their thing.

John Rekenthaler has a position in the following securities mentioned above: PTTAX. Find out about Morningstar’s editorial policies.