Performance Measurement & Evaluation
Leading posts from August include Preston McSwain's call for more honest and accurate fee disclosures and performance reporting; an examination of Sam Zell's take on the economy by Julie Hammond, CFA; tips on how to ace job interviews by Julia VanDeren; Will Ortel's exploration of what's in a hedge fund name; and an analysis of capital markets during times of war by Mark Armbruster, CFA.
Environmental, social, and governance (ESG) issues are important, but are all of them material? California State Teachers Retirement System (CalSTRS) CIO Christopher J. Ailman discusses how he resolves investment conflicts.
Does environmental, social, and governance (ESG) investing add or subtract value from investment portfolios? According to the findings of a trio of researchers, summarized in the new In Practice series, the answer is neither: Investors can both match index performance while also “doing good” for the environment and society.
Mark Harrison, CFA, looks at combining factors in multifactor portfolios and considers issues of performance measurement in factor investing, in the third installment of his Shortcuts to Factor Investing series.
One modern portfolio theory (MPT) pillar that is unquestionably broken is the use of volatility, specifically standard deviation, as a measure of risk, Jason Voss, CFA, and C. Thomas Howard write in the latest edition of The Active Equity Renaissance series. This initial error in MPT's development is a major contributor to active investment management underperformance.
“I know you are afraid and you should be afraid. I will invest you in products that will not stir up your fears." This sentiment is applied over and over again in the investment industry in one form or another, by the "Cult of Emotion."
Instead of being motivated by the rule “Don’t just sit there, do something,” investors might instead act based on the rule “Don’t just do something, sit there,” says Joachim Klement, CFA, in the latest edition of his Dumb Alpha series.
There are three intangibles that all good portfolio managers have, says Jacques Lussier, CFA, but factor-based benchmarks are still the best way to distinguish the effective managers from the lucky ones.
The investment world has changed, and investment professionals need to develop new skills to deal with a new reality. So how can they best serve their clients?
Is investing just about returns? Or are there other services that active managers can perform for their clients that go over and above the bottom line and add value beyond returns?