Beta testing

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Weekly Digest

Last week I listened to a prominent psychologist talk about how people perform everyday tasks. Contrary to popular belief, there are very few things people can do automatically without devoting some thought to them; try reading a book while walking down stairs and you are likely to run into trouble. Hence, when I hear investors say they spend very little time thinking about their beta decision (selecting passive managers), I worry their portfolios could be in for a similar accident. With the explosion of passive strategies in the market place, it is important to spend time getting this decision right; we certainly do.