This practical and instructive guide offers a solution to a challenge more and more institutional partners are facing: misfit risk.
This practical and instructive guide offers a solution to a challenge more and more institutional partners are facing: misfit risk. When a sponsor uses several managers for one asset class, style bias can cause the sponsor's managers in aggregate to underperform the target despite each individual manager performing well against the manager's benchmark. In this monograph, the authors provide a straightforward analytical framework for evaluating and treating this potentially costly misfit problem.