Advisors may be better off employing third party asset managers than going it alone, according to a new data set.
According to Envestnet | PMC, portfolios managed by advisors tend to be more volatile and unpredictable than those managed by third party strategists based on performance dispersion.
“Advisors have different biases and ways of managing portfolios for their clients, and they’re probably following trends too much and failing to abide by an investment process,” says Brooks Friederich, senior vice president and director of fund strategist portfolios at Envestnet | PMC. “With fund strategist portfolios, advisors can offer a more consistent approach.”
Dispersion tracks the range of performance across funds or managers, typically using the statistical measure of standard deviation to signify the variability of returns.