Perhaps the assumption that markets are still anchored by predictable economic policies needs to be challenged. For the first time since the fall of the Berlin Wall, political volatility – once background noise – is potentially reshaping investment risk at a structural level.
Despite authorities taking their foot off the environmental, social and governance pedal and recent volatility in equities and bonds, the benefits of Artificial Intelligence and improved investor transparency are just beginning.
S&P’s ‘flawed’ analysis: Peterson confirms active’s value-add
Admittedly, he has a bit of a bee in his bonnet over this subject, but former fund manager, asset consultant and current advisor and researcher John Peterson, mounts a compelling case for active management. He can also show that active manager performance has been persistent.
In his latest client note, published last week, John Peterson, the founder of the Peterson Research Institute, says the analysis by S&P is “deeply flawed”. Peterson says that if you apply the “correct” analysis you get a different picture.
“In December, S&P released their latest ‘analysis’ of the ‘Persistence of Australian Active Fund Manager’ performance. As noted in previous newsletters, the analysis conducted by S&P is deeply flawed, in that, while it assesses whether investment markets are in static equilibrium or not (they aren’t), it actually says nothing about the persistence (or consistency) of manager performance in the real world,” Peterson says.
“Applying the correct analysis to the data published by S&P, we again find that fund managers available to Australian investors have continued to deliver consistent, and hence investably predictable performance,” the research firm believes.
John Peterson’s career included the famous time when he was working for the old Bankers Trust, in the 1980s. He was a key person in the big call which predicted the 1987 market crash and saved BT’s bacon for several years. It was the ‘halo effect’, as then-BT director and guiding light Mike Crivelli has often referred to it. Peterson is not afraid of making big calls and his clients are usually appreciative.
– G.B.
