TY - JOUR T1 - Some Like It Hot: <em>The Role of Very Active Mandates across Equity Segments in a Core–Satellite Structure</em> JF - The Journal of Investing SP - 17 LP - 26 DO - 10.3905/joi.2012.21.2.017 VL - 21 IS - 2 AU - Frank Nielsen AU - Giacomo Fachinotti AU - Xiaowei Kang Y1 - 2012/05/31 UR - https://pm-research.com/content/21/2/17.abstract N2 - This article reviews the active management opportunity in different market segments, and discusses the role of very active mandates across segments in a core–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–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–satellite structure to implement the global equity allocation.TOPICS: Emerging, global, equity portfolio management ER -