The following research paper was selected for presentation in the Due Diligence Forum program at PortfolioConstruction Conference 2008.

Category
Subcategory

Taking Stock (International Equities)
Diversified

Due Diligence Forum speaker

Bruce Stout
Snr Investment Manager – Global Equities
Aberdeen Asset Management

Due Diligence Forum summary

We are all guilty of sin - fund managers are no exception. Some are seduced by macro noise and hype that can equally inflate or obscure sound investment opportunities. Other self-proclaimed active managers practice the cardinal sin of benchmark hugging. This is manifested in the view that risk itself should be measured against the benchmark, rather than the absolute risk of investing in poor companies and losing client’s money. Active management then becomes a trading game, many positions with little information becomes a substitute for research and conviction.

This presentation and underlying research paper argue that portfolios should be constructed of high quality companies with strong fundamentals bought at attractive valuations, regardless of their geographical location, sector or benchmark weight.