Thank you very little...

-----Original Message-----
From: Dorland, Dan 
Sent: Saturday, September 29, 2001 8:53 PM
To: Dorland, Chris
Subject: Performance of Investment Companies: Schweser CFA I Study Book 2 Page 171


Chris... this is the verbatum text from my CFA study material. You might want to cc this to dad as well:
 
1. Analysis of overall performance. How good are professional money managers?
 
- A study by Sharpe found that the average mutual fund manager did as well as the DJIA, but, after expenses, net returns were below those of the DJIA.
- Jensen found that after adjusting for risk the average fund earned about 1.1 percent less than they should have. Mains revised Jensen's study and conclued that fund performance was neutral.
- Carlson and Lehmann/Modest found that performance measurement varied with the index used, but overall, average performance was consistently inferior to the market.
- Cunby/Glen showed that internatinally diversified funds have not beaten the international index after adjustments for risk.
- Blake/Elton/Gruber show that bond mutual funds have not outpermed relevant bond indexes.
 
3. Market timing abilities: Performance can be attributed to security selection or to market timing ability. Can fund mangers time the market, that is, switch to an aggressive posture in advance of market upswings and switch to a conservative posture in advance of market downswings? Academic researchers conclude that there is no evidence to show that managers can time the market. 
 
4. Consistency of performance: Klemkosky concluded that investors should not use past performance to predict short-run future performance. Dunn/Theisen concluded that historical performance should be given little weight when picking a manager.
 
5. What should you derive from this or expect from a fund?
 
- The fund manager should help you determine your risk return preferences and then help you pick a fund that matches them.
- The fund should give you instant diversification.
- The fund should maintain its diversification and keep its risk class constant.
- The fund should try to achieve superior risk adjusted performance.
- The fund should provide you timely information for tax purposes and reinvest your dividends.

-----Original Message----- 
From: Dorland, Chris 
Sent: Fri 9/28/2001 11:57 AM 
To: Dorland, Dan 
Cc: 
Subject: 



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