FYI: It isn’t often that a very successful hedge fund manager with a winning strategy closes up shop, but that is exactly what this week’s Great Investor guest did in 1995. It’s equally unusual to get back in the business more than a decade later with a dramatically altered strategy. Joel Greenblatt of the Gotham Funds will explain his big change in portfolio strategy, from a very concentrated approach to broad diversification.
Regards,
Ted
http://wealthtrack.com/recent-programs/greenblatt-strategy-change/Gotham Funds Website:
https://www.gothamfunds.com/
Comments
Stats for the top quartile managers 2000-2010:
97% of those who ended up with the best record (=top quartile managers for 2000-2010) spent at least 3 of those 10 years in the bottom half of performance
79% spent at least 3 yrs in the bottom quartile of performance
47% “spent at least 3 of the 10 yrs in the bottom decile of performance, meaning they were in the bottom 10%, so you’re pretty sure that none of their clients actually stuck with them to get the good return”
Two academic studies of institutional investors. Both studies concluded the same thing:
“There is only one metric that you need to predict institutional cash flows: and that metric is, how did the fund do last year, If it did well, it gets all the inflows, if it didn’t do well, it gets all the outflows”
“The best strategy for most people is the one they can stick with”
He likes the structure of ETFs a lot but does not like market cap weighted indexes. He prefers a value index like iShares Russell 1000 Value IWD