The hotel of first quartile performance is full every night, but the guests are always changing, says an investment industry maxim. Strong performance is fleeting and within most asset classes only a few managers can achieve outstanding returns year after year.
Pension and endowment sponsors confront a compound challenge – they must distinguish the managers with talent to beat the markets, and then forecast when those managers will succeed – all based on the unstable foundation of past results. But a small informal coalition of managers, sponsors and consultants has borrowed techniques from organisational psychology, and fashioned a framework to quantify the cultures of investment management firms, and help improve sponsors’ odds.
