Why Asset Managers Need to Abandon the Olympic Athlete Mentality.

What do most asset managers and Olympic athletes have in common? They believe that if they are the top performer in their field, they will win a gold medal.

In the case of asset managers, the proverbial “gold medal” is winning over an LP or reaching their fund’s capital raise target.

Asset managers need to abandon this mentality because statistically speaking, they’re never going to be the best performer in the world. Or even in the top 3 best performers.

This isn’t some snarky comment to put people down, it’s just the reality of statistics. There are approximately 10,000 hedge fund firms in the world, the majority of which, are managed by intelligent, competent people.

Think of it from the athlete’s perspective. An athlete to even make it to the Olympics had to dedicate every day to their sport, for most likely the majority of their life. They gave up blood, sweat, and tears to become the ultimate performer in their sport – and even then, they are not guaranteed a spot on the podium.

Now think of it from a manager’s perspective. The individual most likely went to a top tier university for their undergraduate and worked for a reputable institution for many years. Maybe even went the extra mile and received their MBA or CFA designation. They then eventually came up with an alpha generating strategy that does or has the potential for excellent performance. In today’s environment, even all of this doesn’t guarantee them a spot on the podium (successfully raising a nine-digit fund).

So are asset managers, like Olympic athletes, destined to only “winning a medal” if their performance is slightly better than their competitors? No!

Unlike Olympic athletes, asset managers are not restricted solely by their performance. Fortunately, asset managers can use a variety of other talents to win – such as leveraging their experience and network to provide access to a niche asset class or strategy, consistently sharing thought-provoking market insights to a targeted audience, or positioning their offering to fill specific holes in an investor's portfolio.

Asset managers need to abandon the mentality of Olympic athletes – that performance is the only thing that will make them a winner. It’s not guaranteed that performance will make them a winner and it’s not required. Asset managers can, and do, win over investors based on other aspects besides performance.