CHAPTER 4Investment Beliefs as Guiding Tools
Key Take Aways
With the purpose, mission and goals in place, a board is ready to take the next step and focus on the design of the investment management process: developing investment beliefs. Investment beliefs are important because they create a context for value-creating investing. What are the core competencies of an investment organization that is aiming for success in the capital markets? How does and how should an institutional investor view capital markets? This is a strategic issue that seems obvious but has seldom to date been addressed in the literature.1 Research by Clark and Urwin2 shows that best practice funds treat investments as a strategic core element, based on investment beliefs that can stand the tests of logic, informed debate, and occasional revision when new evidence comes to light.
In this chapter 3 we define what investment beliefs are; we argue that these are extremely useful for a board. Next, we consider how to use them and we delve into the question of how to develop them.
WHY INVESTMENT BELIEFS MATTER
Investment beliefs matter more than you know, or that you would like them to. Every investment approach is based, at least implicitly, on a set of beliefs. If thoughtfully developed and diligently implemented, investment beliefs are an essential step towards investment excellence, as well as to funds' ...
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