Hi Joachim,

Very nice article.

I am confused about a couple of things and am eagerly waiting for your insights to learn.

1) You rightly mentioned that investment styles go out of favor leading to underperformance. For example, in the last quarter of 2016 and for the whole year, value outperformed growth. However, do we not use the proper benchmark for each fund based on investment style? Even though growth is out of favor, for a growth fund we are using a growth benchmark (and of similar market cap) and therefore I thought this argument does not hold that a particular fund underperformed ( a similar benchmark) because the style is out of favor? What are your thoughts on this?

2) As an investment consultant (in the learning mode), how should I evaluate superior managers (from the average ones) no matter how bad the near term (upto five years) performance has been for the superior manager. I know a lot qualitative factors come into the picture like manager tenure, investment process, sell discipline etc. But I am more interested to know how to evaluate the quality of sector and stock allocations that are likely to eventually pay off over a full cycle.

I am a regular reader of your blog.

Best,
Saibal