Skill Versus Luck: Taking the Guessing Out of Equity Fund Selection [Hardcover]

How to move beyond guessing about manager skill with decision-based analytics, not the outcome-based analytics used at present.

Skill is the raison d’être for active equity management. Yet precious little is known about manager skill. What is skill? Who has it? How should it be measured? Is a manager’s skill improving, declining, or remaining consistent? Without answers to such fundamental questions, capital allocators have no choice but to rely on inferences, hunches, and guesswork.

In Skill Versus Luck, Michael Ervolini explains how to move beyond skill fog with newer analytics developed over the past decade. Unlike conventional analytics that simply rehash fund outcomes, the newer cause-and-effect analytics relate a manager’s decisions to fund excess returns, providing rigorous measures of manager skill. Results from these newer analytics enable capital allocators to understand manager skill for the first time and make more effective allocation decisions.Table of Contents
Foreword
Chapter 1. The Search For Skill
Explains the reasons skill is relentlessly sought yet rarely identified.
Chapter 2. Sage Advice
Offers insights from industry leaders on the value of actively managed equities.
Chapter 3. Looking For Skill In All The Wrong Places
Describes the shortcomings of conventional analytics in quantifying skill.
Chapter 4. Information Advantage
Offers a method for assessing the alpha generation from a fund’s average new stock purchase.
Chapter 5. Skill Is Where The Action Is
Explains the importance of relating decisions to outcomes in order to measure skill.
Chapter 6. The Value Of Counterfacl“¦