Complimentary EDHEC survey: investment managers claim to lack sufficient knowledge to manage risk optimally

The feedback received from the industry confirms that industry practitioners are largely convinced of the benefits of advanced portfolio construction techniques. In their view, the main barrier to widespread adoption of these techniques is the lack of knowledge in the industry, not implementation costs or a lack of client interest. 95% of the practitioners who responded share EDHEC's opinion that improvements need to be made to portfolio construction practices. Even though the recent events in financial markets are likely to increase investors' needs for portfolio construction that take into account extreme market scenarios for various asset classes, investment managers do not fully take into account extreme risks when constructing portfolios. They also fail to employ techniques that avoid generating overly-concentrated portfolios because of poor input estimation.

The study is available on :
http://docs.edhec-risk.com/mrk/090313_Publication/EDHEC_Publication_Portfolio_Construction.pdf