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This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour.
The overwhelming evidence is that fund managers who are willing to back their convictions with punchy bets are the ones that tend to outperform by the highest margin.
There have been numerous studies looking at the different attributes that contribute to manager outperformance, ranging from simplistic momentum strategies (Jegadeesh and Timan, 1993), to the quality of the managers education (Chevalier and Ellison, 1999). However, there seems to be a growing body of work that suggests that the concentration of a manager’s portfolio has a significant effect on the relative performance delivered by the manager.
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