FP Article 15.11
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Investment Risk -
Manager's Risk
by Rajen Devadason
Experience does not err; only your judgments err
by expecting from her what is not in her power.
Leonardo Da Vinci
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In
this day and age, most of us benefit
greatly from the expertise of money
managers. However, that gain comes
with two distinct costs:
First, no money
manager worth his salt comes cheap.
Second, even the best money manager
makes mistakes. Manager's risk,
therefore, is the risk assumed by an
investor that her investment might
underperform simply because of
mistakes committed by the fund
manager.
You should aim to
reduce such risk. |
The best way to do so is to restrict your hedge
fund or mutual fund or unit trust fund exposure
to investments that enjoy long proven track
records under - and this is vitally important -
the current fund manager.
|
This is an article explaining
manager's risk. I hope you enjoy
reading it. But if it isn't what
you're looking for, you're welcome
to search for something that better meets
your needs. Thank you for allowing
me to serve you.
Rajen Devadason |
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|
That's because there is little
point in selecting a fund that has a great
history if the person currently at the helm is
not the same one responsible for creating that
history!
So, before you dive into any
fresh investment, spend some time looking into
the background of the people who manage it.
And, if after all that ferreting
about you discover the previous manager has left
his job of managing the fund, do yourself a
favour and invest the additional time needed to
find out whatever you can about the past
performance of this ‘new kid on the block’.
Even though no fund manager can
hope to be right all the time, you should still
do all you can to minimise the risk of parking
your hard earned cash with someone who is less
than supremely able to take care of it and,
hopefully, make it grow.
If you'd like to continue to learn more about
other types of investment risk, here's
additional information for you...
15 Types of Investment Risk
(OR, to sign up for a
FREE
16-lesson eCourse on Investment Risk, please
click here.)
1.
Borrowing Risk
2.
Company Risk
3.
Credit Risk
4.
Currency Risk
5.
Diversification Risk
6.
Industry Risk
7.
Inflation Risk
8.
Interest Rate Risk
9.
Liquidity Risk
10.
Lost Opportunity Risk
11. Manager's Risk
12.
Market Risk
13.
Market Timing Risk
14.
Political Risk
15.
Prepayment Risk
© Rajen Devadason
