Strong investment beliefs that command institution-wide support, are aligned with objectives and inform all investment decision-making, are agreed and documented.
Investment is essentially about making judgements and decisions in the present, typically with reference to the past, to cope with or exploit an uncertain future. Investors do this by using their underlying beliefs about how the world works. The quality of those underlying beliefs is a major determinant of success in investment.
Beliefs are working assumptions about the investment world that underlie investment practices and decisions which, when developed and shared, help make goal setting and decision-making more effective. The most helpful beliefs accurately describe future outcomes, secure organization-wide support and are detailed. All investment decisions are based on beliefs; however, all too often these beliefs are implicit, undocumented or unstructured. Investment beliefs should reflect views on the overall investment goal of the fund and governance areas as well as beliefs on alpha and beta which will drive the investment approach and strategy.