Pensions often hire managers their consultants have recommended primarily because other pensions have hired these managers.
How can these managers pursue foreign acquisitions and end up managing the acquired corporations?
These managers trade privacy and quiet for the chance to rub elbows with the masses.
In other words, investors have flocked to these managers supported by Calpers, only to experience lackluster performance.
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"These managers he is backing are the best operating managers in the world, bar none, " he said.
How much are the performance fees related to each of these managers, both in percentage and dollar terms?
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Do these managers really have loyal clients strategically dispersed around the country ready to rally in their defense?
Not surprisingly, the funds these managers are responsible for do not perform nearly as well as their personal accounts.
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These managers criticize companies that fail to hire minorities, yet they fail to use minority brokers for their trading.
They asked these managers about their level of responsibility over resources and staff.
These managers were paid based on the percentage of assets they managed, rather than collecting commissions and spreads through trading.
The most important thing these managers did not do was allow the firm to be dominated by its investment bank.
Unlike in recent years, when resurgent markets around the world helped boost returns, these managers may face stiffer challenges in 2011.
So these managers eschew the passive approach to tracking an index in favor of a semi-active approach to portfolio management.
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An essential conduit for direction, these managers are often torn in two.
Unit trusts account for about 13% of the British equity market, which means that, to a significant extent, these managers are the market.
However, a number of these managers lacked the capability to work sideways: Their horizons extended only to the boundaries of their own units.
And given their focus on uptime, these managers are, perhaps justifiably, concerned with the risks of putting too many applications on too few physical servers.
Of course, since these managers are paid a fee based upon the value of the assets they manage, they have every incentive to inflate valuations.
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When put demand slows, it suggests many of these managers are not in buying mode, but as put demand grows, it implies they are buying.
These managers engage themselves in meaningless activities that miss the mark.
And I suspect that it is their inexperience with, or even a fear of, hard data that leads these managers to imbue numbers with almost mystical significance.
In the absence of regulation and transparency, pensions should think long and hard about their alternative investments before retaining or allocating even greater amounts to these managers.
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If these managers performed well, my clients would make money, the managers would earn more fees, my firm would get their cut, and I would get my piece.
As a result, it can be difficult for institutional investors to evaluate these managers using their traditional tools, which may rely heavily on the prior track record of earlier funds.
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On the one hand these managers may be some of the largest, if not the largest shareholder of a large corporation and as such may ostensibly hold great voting power.
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These managers charge the highest fees (thus have lots of money to attend consultant conferences and contract for consultant marketing advice) and have lots of brokerage dollars to kick-back to consultants.
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If we go back to an environment like the 1970s, it may be difficult for any manager to navigate those extremes, but these managers have done well with the recent changes.
Inevitably, some of these managers do better than others.
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