Dan Kemp, co-head, investment consulting and portfolio management at Morningstar Investment Management EMEA, explains why portfolio construction could be just as important as fund selection, if not more so.
It is a truism of the investment world that portfolio management is a combination of art and science. But for most of history, investment has been almost entirely art. It has only been since the advent of computers that science has made any serious contribution to the investment management process, and it remains confined to a few key areas. Of those parts of the investment process still relatively untouched by science, the most prominent is portfolio construction. This oversight should not be surprising, because portfolio construction has always been the ‘poor relation’ in the investmen...
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