What Majority Of Managers Do

I have had the privilege of working at several firms, where I gained firsthand insight into how money is managed. I have also conducted extensive reading and research on the topic of investment management. Below, I will outline several ways capital is deployed, based on both my personal experience and what I have studied.

1) Stock Picking: Some managers focus on stock selection. They may follow a value approach, a growth approach, or a blended strategy. Regardless of the approach, they select stocks they believe will perform well when compared to their market benchmark.

2) Manager Selection: These firms may select 10, 20, or even 30 different managers to oversee client capital. Across these managers, exposure typically spans large-cap, mid-cap, and small-cap equities, as well as short-term and intermediate bond funds, U.S. Treasuries, and corporate bonds.

• Some investment managers maintain portfolios of mutual funds and ETFs while also incorporating alternatives, such as private equity or venture capital, through firms like JPMorgan, Goldman Sachs, or Morgan Stanley. They may also engage external managers to oversee all or part of their equity portfolios, using firms such as Cumberland, Schafer Cullen, or the major banks.

3) This is kind of redundant but some firms don’t actively select investments themselves. They don’t pick individual stocks or carefully curate mutual funds or ETFs; instead, they rely on a firm like JPMorgan to provide a pre-selected suite of funds, and they simply allocate their clients’ capital accordingly. In many cases, there is little original analysis involved. From my experience, the funds offered by JPMorgan and other large banks are often fairly standard and unremarkable.

4) Then there are the so-called “elite” managers—hedge funds. To be fair, the goal of a hedge fund isn’t just to beat the market. They aim to generate what’s known as absolute returns (we can do that to). What are absolute returns? Simply put, they seek positive returns regardless of market direction. If you check out my blog post here, you can see Bloomberg’s reported hedge fund returns for 2025. The media has been touting it as the best year for hedge funds since 2009.

What do all these strategies have in common?

Most of them consistently fail to beat the S&P 500 (or their respective benchmarks). When you hire these managers, you are essentially paying for an expensive mutual fund—except this one has a phone number you can call during business hours. I’m not against professional management; if I were, I wouldn't be in this industry. However, I do take issue with charging high fees for performance that lags behind the indexes on consistent basis. The industry is happy to take your money, rebalance your portfolio once a year, and offer occasional check-ins, all while charging tens of thousands of dollars for subpar results. In many cases, you would be better off simply using a low-cost index fund.

Wrap-Up

Instead of following the herd, we ignore the noise of Wall Street and the broader industry to prioritize what actually works: affordable investment strategies backed by probabilistic advantages and disciplined, rational decision-making.

Call or email us today to schedule a meeting:

Email: jon@belvedereinvestmentsco.com

Phone: 865-375-3027