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Latest from James Montier

LATEST FROM JAMES MONTIER

A thoughtful piece from GMO’s James Montier.

Benchmark obsession undermines investor returns
By James Montier

Sir John Templeton, the pioneering global investor, argued that the aim of investing was quite simply “maximum real returns”. Over time this simple but powerful objective has been lost. This is all the more surprising because, clearly, real returns matter to the end investor, particularly in current markets. Pensions are paid from real returns not relative ones.

So where did the concept of relative performance originate? It probably stemmed from good intentions (as do most bad ideas). Why pay active fees if the managers don’t deliver returns above a passive benchmark? However, this idea has morphed into an unhealthy obsession with pigeon-holing managers into niche buckets.

See the rest here: http://www.ft.com/intl/cms/s/0/77f0077c-c35a-11e0-9109-00144feabdc0.html#axzz1YVIQr55V

This material contains the current opinions of the author but not necessarily those of Black Cypress and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without proper reference. Past performance is not a guarantee and may not be a reliable indicator of future results. ©2014, Black Cypress Capital Management