@article {Nielsen17, author = {Frank Nielsen and Giacomo Fachinotti and Xiaowei Kang}, title = {Some Like It Hot: The Role of Very Active Mandates across Equity Segments in a Core{\textendash}Satellite Structure }, volume = {21}, number = {2}, pages = {17--26}, year = {2012}, doi = {10.3905/joi.2012.21.2.017}, publisher = {Institutional Investor Journals Umbrella}, abstract = {This article reviews the active management opportunity in different market segments, and discusses the role of very active mandates across segments in a core{\textendash}satellite portfolio structure. Research based on manager performance data over the last 10 years indicates that there is little evidence that average emerging market or small-cap managers have produced higher or more persistent risk-adjusted returns relative to their developed market large-cap peers. Therefore, institutional investors may consider active and passive management as complementary strategies across all equity segments.Due to the outperformance of high active risk mandates over the analyzed period, a simulated core{\textendash}satellite structure across different equity segments achieved a higher information ratio than a combination of low active risk managers. The outperformance of high active risk mandates may reflect links between higher manager skill, higher investment conviction, and/or fewer constraints. Depending on investment beliefs, institutional investors might explore such a core{\textendash}satellite structure to implement the global equity allocation.TOPICS: Emerging, global, equity portfolio management}, issn = {1068-0896}, URL = {https://joi.pm-research.com/content/21/2/17}, eprint = {https://joi.pm-research.com/content/21/2/17.full.pdf}, journal = {The Journal of Investing} }