LuckorSkill?IsyourManager'sAlphaGenuine?
Asset managers are quick to mention that they have outperformed a benchmark asset, but often these claims are limited to a hand-picked period or cover a short time frame from fund inception. Such claims must be statistically tested to determine if they are more likely the result of investment skill or simply chance. The Student’s T-test allows an investor to evaluate the statistical strength of a claim of superior alpha on returns. We performed an example of this analysis on one of our partner funds, Veripath Farmland Funds, and found that Veripath’s portfolio selection generated returns above those of Canadian farmland generally and that the alpha of these returns was statistically significant, meaning it is highly unlikely that it was generated by chance.View Full Report