PT - JOURNAL ARTICLE AU - Robert Ferguson AU - Anna Agapova AU - Dean Leistikow AU - Joel Rentzler TI - Chasing Performance and Identifying Talented Investment Managers AID - 10.3905/joi.2018.1.067 DP - 2018 Feb 28 TA - The Journal of Investing PG - 52--64 VI - 27 IP - 1 4099 - https://pm-research.com/content/27/1/52.short 4100 - https://pm-research.com/content/27/1/52.full AB - A common refrain from investors is that they have bad luck in hiring investment managers. Their managers’ post-hire performance tends to be disappointing relative to their pre-hire performance. This may be because of performance-based hiring and firing. The literature documents the practice of chasing performance. This article illustrates that the probability that a talented manager’s performance will exceed the best in a pool of untalented managers can be surprisingly small, even for long time periods; hence, chasing performance is unlikely to result in choosing the best managers. This article also provides a framework for mitigating the detrimental effects of chasing performance.TOPICS: Performance measurement, portfolio theory, portfolio construction