Understanding Fund Manager Underperformance and Strategies for Improvement

Common Causes of Underperformance

• Lack of individual focus due to broad fund objectives
• Benchmark hugging instead of generating absolute returns
• Regulatory requirements limiting flexibility
• Over diversification leading to diluted returns
• Poor risk management and lack of transparency

Structural and Systemic Issues

• Constraints imposed by fund mandates limit growth potential
• Inefficiencies in the industry increase costs passed on to investors
• Limited transparency and misleading fund labeling
• Competition from exchange traded funds affecting performance
• Misuse of buzzwords like artificial intelligence for marketing

Strategies for Improvement

• Take control by getting the data yourself
• Learn to manage your investments DIY
• Reduce costs by removing middlemen and aligning incentives
• Utilize online investing platforms for easy portfolio management
• Implement effective strategies for higher returns and transparency