How Often Do Fund Managers Check Performance?

Even some professional portfolio managers admit that it is hard not to monitor the performance of their holdings at times

Dave Meats, CFA 20 July, 2021 | 12:17PM
Facebook Twitter LinkedIn

magnifying glass

Active equity managers are under more pressure than ever to outperform their passive counterparts and must stay on top of current market trends. This prompted Morningstar Manager Research analysts to ask how often portfolio managers check the performance of stocks they hold.

The short-term ups and downs of the stock market can seem like a casino. Prices updating every second, flashing green and red lights, and constant news updates can lure investors into checking their portfolios constantly. Even some professional portfolio managers admit it’s hard to step away at times.

Several managers check performance throughout the day, citing the importance of looking for fresh opportunities. Others say they try to ignore daily returns to disregard as much short-term noise as possible.

It's all Relative

“It’s like looking at paint dry,” says John Mowrey, manager of the Virtus NFJ Dividend Value fund, when asked how often he checks the performance of the stocks in his portfolios. The NFJ team prefers daily monitoring of relative valuations rather than price movements. The team creates custom peer groups that it feels are more suitable comparisons than traditional industry groupings. This relative valuation approach allowed the value-oriented team to snap up growthier names such as Microsoft (MSFT) and Mastercard (MA) when their valuations nearly halved during 2020’s first-quarter sell-off.

Other managers also cite monitoring valuation, not price movements, on a regular basis. Caesar Bryan, longtime manager of Gabelli Gold, watches the performance of his stocks closely but rarely trades. He prints out two sheets with the same metrics every day: one has the portfolio’s current holdings, the other has stocks on his watchlist. Bryan believes it can be instructive to see how similar companies can trade relative to one another.

While investors expect daily price fluctuations, it is occasionally unclear what’s driving trading activity. To avoid overthinking short-term movements, some managers rely on their analysts to alert them of material news. This approach came up in several conversations. 

Ethan Meyers, manager of Touchstone Mid Cap Growth and Harbor Small Cap Growth, confesses he feels the impulse to review returns after a few hours away. Indeed, Meyers believes there is some value in staying on top of market developments. Yet he also tries to ensure that constant checking doesn’t impact decision-making. Only the team’s sector heads access real-time attribution, allowing the rest of the group to focus its efforts and attention elsewhere.

Mike Smith, co-manager of the Wells Fargo Discovery and Wells Fargo Enterprise funds, also relies on his team for relevant updates and traders notify him of unusual price activity. Smith, who started as a trader, believes that if an investment depends on the fluxes of a few decimal points, it’s not a good idea. 

Managers we spoke to often cited the trailing week’s returns as the shortest stretch that provided insight. Harbor Small Cap Value’s Pavel Sokolov reviews performance on a weekly basis in recurring meetings but tries to avoid overanalysing short-term price movements. The weekly review does, however, often spark broader discussions about names in the portfolio.

Some Managers Don't Check Performance

While most managers seem to regularly check stock returns or valuations, Austin Hawley of Diamond Hill Large Cap, was not so keen on checking performance daily, weekly, or even monthly. Hawley is vaguely aware of performance over various periods but believes monitoring short-term gyrations has little to do with his long-term investment theses. The fund’s low turnover backs up Hawley’s statements. It has ranged from 22-33% over the past three years, versus 28-43% for the large-value Morningstar Category median.

The wide array of answers shows there is no one right way of going about checking performance. Rather, the question gives a glimpse into managers' own unique processes. One could argue that how often a manager checks on the performance of holdings is far less important than when a manager chooses to act on those impulses.


The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Dave Meats, CFA  David Meats, CFA, is a senior equity analyst for Morningstar.


© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures