Abstract
Most financial markets are mostly efficient most of the time. Inefficiencies– opportunities to add value proportionate to marginal systematic risk– appear sporadically and unpredictably. To improve the information ratio, the manager must search constantly and widely for inefficiencies. That is, manager performance depends crucially on broadening manager scope. The author argues that clients and their scope by structuring mandates in ways that are not accurately conventional. Managers can also broaden their scope by organizing themselves as teams with specialist and generalist portfolio managers who cooperate to diversify across not only countries and currencies but also investment styles. Widening scope should also improve a management team's skill.
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