Qu 11 Reading 47 ask the following: If international investment managers as a group, beat some national market index what does it tell us about the performance of local investment managers? Ans: If international investors as a group beat some national index it tells us that that local investors as a group probably underperformed the index. Could someone explain the rationale behind the answer. Essentially I was wondering why it is that the good perfromance does not extend to local investment manager?
cfahead Wrote: ------------------------------------------------------- > Qu 11 Reading 47 ask the following: If > international investment managers as a group, beat > some national market index what does it tell us > about the performance of local investment > managers? > > Ans: If international investors as a group beat > some national index it tells us that that local > investors as a group probably underperformed the > index. > > > Could someone explain the rationale behind the > answer. Essentially I was wondering why it is that > the good perfromance does not extend to local > investment manager? interesting i think it has to do with the average paradox-everyone cannot be above average …the index represents the average market performance …if int investors outperform it then by def the local on average underperfromed it …
This is the kind of simple commonsense checks that my manager does all the time. You present strategy results , and he will ask you to slice and dice it until he discovers a flaw or data or calculation error .based on counts , averages , excess returns etc.