CHAPTER 6The Investment Management Process
Chapter Outline
6.1 INTRODUCTION
It is hard to determine whether your investment strategy has been successful or attractive to prospective clients if you cannot articulate your investment process to begin with. You may have superior performance relative to a prespecified benchmark, but you will not know if this performance is the result of skill or simply an unintended bias. Prospective customers will find it difficult to determine whether your strategy fits their needs if you cannot clearly explain how and why it works. In addition, it will be difficult to improve your process if you cannot define the key individual components of your approach.
This chapter discusses investment management techniques used for developing and implementing asset allocation policies based on the techniques introduced in Chapters 3 through 5. This chapter describes a five-step process for developing successful investment strategies and explains how investors can ensure that quality is controlled throughout the development and management processes. Portfolio managers can follow this checklist to define, develop, and articulate their own investment strategies. ...