Active management - Lessons for investment managers, consultants, and clients.

Most financial markets are mostly efficient most of the the time. Ineffienc ies opportunities to;add value dis-proportionate to marginal systematic ris k -- appear sporadically and unpredictably. To improve the information rati o, the manager must search constantly and widely for inefficiencies. That i s, manager performance depends crucially on broadening manager scope. The a uthor argues that clients and their consultants can help investment manager s widen their scope by structuring mandates in ways that are not: currently conventional. Managers can also broaden their scope by organizing themselv es as teams with specialist: and generalist portfolio managers who cooperat e to diversify across not only countries and currencies but also investment styles. Widening scope should also improve a management team's skill.