%0 Journal Article %A Robert Ferguson %A Anna Agapova %A Dean Leistikow %A Joel Rentzler %T Chasing Performance and Identifying Talented Investment Managers %D 2018 %R 10.3905/joi.2018.1.067 %J The Journal of Investing %P 52-64 %V 27 %N 1 %X 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 %U https://joi.pm-research.com/content/iijinvest/27/1/52.full.pdf