Man Group’s 2016 Unconventional Views video series is designed to present original thoughts and insights that challenge the consensus view. The videos feature leading executives from the firm’s four investment engines, Man AHL, Man GLG, Man FRM and Man Numeric, explaining their views on various investment themes.
If past performance is not indicative of future results, then why bother paying attention to it? In this video, Sophie Rossini, Research Section Head at Man FRM, sheds light on the behavioral dilemma associated with track records and how to use them properly. She explains that while a track record is not an indication of future performance, it can and should be used to provide valuable insights into the investment psyche of a manager (such as risk appetite). Furthermore, a track record can confirm, invalidate, or shed light on exposures embedded in a strategy that may not necessarily come across clearly through other channels. Sophie argues that while track records should be viewed as one of many tools available to investors to help them make informed decisions, a track record that appears inconsistent with either the story told by the manager or the returns one can expect to extract from the strategy described should be viewed as a red flag.
Past performance is not indicative of future results. The value of an investment and any income derived from it can go down as well as up and investors may not get back their original amount invested. Opinions expressed are those of the author, may not be shared by all personnel of Man Group plc (‘Man’) and are subject to change without notice.
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