The Impact of Culture on Investment Performance

Over the years of researching asset managers in South Africa and globally, there have been many cases of successful asset managers who have seemingly fallen apart, lost assets and faced uncertain futures. This deterioration often happens quickly and without warning. We spend significant time analysing whether there is a common thread running between these firms that face collapse. Is there any specific factor or common denominator that we could focus on which would allow us to identify those asset managers in advance and avoid them?

Examples of factors used by many to identify issues within an asset manager are things such as prolonged poor performance, a key member of the investment team leaving the business or high levels of turnover in the investment analyst team. The challenge is that these issues normally occur after the situation has already deteriorated. They often happen as a result of the collapse rather than being the cause, therefore using these factors to identify problems means it is already too late and the negative performance impact has already been felt.

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