If you’re a frequent reader of our blog (or, better yet, a client who’s drank enough of the Apollo Kool-Aid!) then you know the importance we place on a long-term focus – on filtering out the noise.
Why is it important? Because anything’s possible in the short-term. Daily blips are a distortion. They blur the line between a solid approach and an irrational, act now mentality. They can make smart people look dumb and vice versa.
Remember that investing is but one piece of a larger puzzle. If you prefer it’s one training regimen for the marathon of life. Sprinters don’t win marathons.
So how do you find long-term investments? To whom should you entrust your money?
The answer lies in incentives. Skilled managers can identify long-term drivers of value. Investors should have the patience for these theses to play out. Therefore they should seek out firms that reward managers on long-term performance.
Excluding firms that use large sub-advisory agreements (sorry Vanguard!) here’s a list of the 20 largest mutual fund firms and details of how they compensate their managers:
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