Stephen Cranston Associate editor

For most pension funds, it still makes sense to give broad balanced mandates to investment managers. There used to be a theory, popularised by the Frank Russell asset consulting group, that the focus should be on picking specialists. A top specialist sprinter will always be faster than a decathlete competing in nine other disciplines, so why should it be any different in asset management? Can a generalist outperform somebody who focuses on emerging market equities the entire day?

The downfall of this argument has always been finding the right person to conduct the orchestra. Most asset consultants started life as actuaries doing valuations for defined benefit funds. They have never run money, so it is rather like a conductor who has never picked up a musical instrument. There used to be a view that fund managers are good at picking stocks but should steer clear of asset allocation decisions. Recent evidence might show that it is exactly the opposite. As Graham Mason, founder o...

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