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The true measure of an active investment manager is more than a beating-the-market track record, longtime hedge fund investor Ted Seides says.
“It’s a combination of process, client base and a deep passion for the business” and more, Seides, founder of Capital Allocators and host of the popular podcast of the same name, tells ThinkAdvisor in an interview.
In 2007, Seides took the active-versus-passive investing debate to an extreme when he famously initiated a non-profitable bet with Warren Buffett pitting the performance of the Vanguard S&P 500 from 2008 to 2017 against five hedge fund of funds products.
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What are some of the forces?
One is volume of trading. When I first got to Wall Street in the early 1960s, 3 million shares a day was a huge day. Now it’s 6, 7, 8
billion shares. Another [factor] is that everybody knows everything today because all they have to do is go to a Bloomberg terminal and punch it out. And the SEC has said that if you’re a publicly listed company and give anybody information that might be useful, you must make a diligent effort to be sure everybody in your investment group gets the same information at the same time.
In 2018, the Los Angeles County Employees Retirement Association began asking prospective asset managers about diversity.
The questionnaire given to managers that responded to LACERA’s requests for proposals asks for details on who implements firm diversity policies, how many confidential settlements or non-disclosure agreements are related to workplace sexual harassment or discrimination, and whether firms conduct a pay disparity analysis.
LACERA is not the only asset allocator to make diversity and inclusion questions an explicit part of the request for proposal and search process. For instance, in current requests for proposals both the Illinois State Universities Retirement System and the Ohio Public Employees Retirement System included questions on diversity.