How to Select Investment Managers & Evaluate Performance: A Guide for Pension Funds, Endowments, Foundations, and Trusts, by G. Timothy Haight, Stephen O. Morrell, and Glenn E. Ross, Wiley Finance, $ 85, 260 pages.
Among them, the three authors have a PhD, DBA, MBA, MS, BS, and a ton of investment industry experience. But if this is the kind of information men of this quality think investment committees need, you might want to consider managing your own money.
The problem isn’t that the information is wrong. These guys know how to check their facts. The problem is that the information is radically incomplete. Consider this sentence, “The process of identifying candidates should begin with the establishment of the investment manager criteria.” The process of selecting dentists or attorneys or programmers may start this way, but selecting investment managers involves a completely new level of complexity. Before establishing the investment manager criteria, the investment committee needs to decide what it wants its investments to accomplish and, most important, it needs to decide what its own skills are.
Haight, Morrell and Ross seem to think that selecting investment managers is relatively easy or, at least, no more difficult than hiring zookeepers or accountants. For example, they spend time on constructing a request for proposals, but never talk about what questions the investment committee should include or, most important, how to tell a good answer from spin. My own conviction is that selecting high quality investment managers is extremely difficult and that this book will add nothing to your knowledge and skills.
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