Targeting Returns
Many fund managers target a specific return that they want to get. They may look at market averages and try to at least stay average. They feel immense pressure from clients, themselves, their ego, and other things. It is as if someone is pointing a gun at their head.
What targeting returns does is make you more prone to bad decisions. Emotions get in the way as pressure from the outside is felt. What many managers do under the pressure is to inject unreasonable risk into the portfolio to try and boost returns. It is not a good strategy.
First Focus on Risk then on Value
The best strategy is to first focus on risk and then do your homework to justify if the risk is worth taking. Then, and only then, will the best decisions be made.
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