Portfolio Management
There are many recent funds (less than 5 years) with good track records running "concentrated conviction" strategies. I don't mind funds that run conviction strategies and in fact I like the idea of funds which high (>3%) tracking errors, but there are many that are unable to discern skill for risk taking.
In general across many funds I look at, a lot of the time I worry that PMs mistake alpha for beta in their concentrated positions. Thematic and sector beta exists and don't think enough pay attention to this like they should. There are risks that many PMs just don't recognise but mostly it isn't an issue.
"Conviction" takes this to another level however, increasing position size based on conviction leaves very little room for error. Conviction sizing is a massive issue and there are many funds that have been sizing positions based purely on "conviction" leaning into the upside potential while turning a complete blind eye to risk.
It becomes incredibly hard for a PM to change their mind when they run both concentration and conviction in a position, the anchoring bias that underwrites every position simply can't get any bigger. Pulling apart an investment thesis becomes an ego wounding exercise that few have the ability to process.
Positions start going back and all of a sudden, bottom-up PMs start talking about macro factors now to justify their positions. Absolute shit-takes in my opinion, well and truly out of the circle of competence of many.
And all of this has resulted in a clear observation from me - funds that have risk-based sizing have done well in the last 12 months.