Fund managers are like zebras. Those in the middle (owning popular stocks) are safe from predators (getting fired), even if performance is mediocre. Those on the outside (owning unfamiliar stocks) find better grass (higher returns) but risk being the first ones eaten if an idea fails. This creates an institutional imperative to stay with the consensus.

Many fund managers approach capital raising by broadcasting their own "unique" story. However, the most successful ones operate like great listeners, first seeking to understand the specific needs and constraints of the Limited Partner (LP) and then aligning their value proposition accordingly.

Despite being marketed as diversifiers, the broad category of liquid alternative products has largely failed. On average, they exhibit a high correlation to equities (around 0.8) while delivering poor returns (2-3% annually), effectively acting as expensive, underperforming equity proxies rather than true diversifiers.

Building a multi-strategy fund sequentially by adding 'satellite' strategies to a 'core' one is flawed. It signals to investors and potential hires that the new areas are non-essential, making it harder to attract top talent and leading to pressure to cut them during downturns.

The modern ETF landscape is characterized by issuers launching a high volume of specialized products, including leveraged single-stock and long-tail crypto ETFs. They accept that many will fail, hoping a few become highly profitable hits.

The dominance of low-cost index funds means active managers cannot compete in liquid, efficient markets. Survival depends on creating strategies in areas Vanguard can't easily replicate, such as illiquid micro-caps, niche geographies, or complex sectors that require specialized data and analysis.

Asset managers can avoid recycling old ideas by running a parallel institutional research service. The need to deliver fresh ideas to sophisticated, paying clients who challenge assumptions creates a powerful forcing function for continuous, contrarian idea generation that benefits the asset management side.

In large hedge funds, analysts face pressure to present unique, non-obvious ideas to their bosses. This incentive structure can lead to overly complex or "cute" investment theses that may underperform simpler, more obvious opportunities.

Contrary to classic theory, markets may be growing less efficient. This is driven not only by passive indexing but also by a structural shift in active management towards short-term, quantitative strategies that prioritize immediate price movements over long-term fundamental value.