Practical analysis for investment professionals

Performance Measurement & Evaluation

Diversification or Diworsification?

During the financial crisis one mangled term to gain widespread use was "diworsification,” the counterintuitive idea that carrying all your investment eggs in one basket might be a better idea than old-fashioned diversification. In recent years, tactical asset allocation and trading out of trouble seemed to protect capital better than traditional approaches. One recent study even suggested that concentrated portfolios may be completely rational for those investors with little financial wealth relative to income.

Lessons from Golf: Is it Time to Sell a Fund Manager?

The golf analogy, "What are the chances that someone posting a 50 on the front nine is actually a scratch golfer?" is used to describe emerging managers.

Book Review: Best-Practice EVA: The Definitive Guide to Measuring and Maximizing Shareholder Value

Executives who are looking for metrics that line managers can use to fuel growth, as well as financial analysts seeking tools to enhance the investment decision-making process, will find this guide to the new EVA ratios an invaluable addition to their evaluation arsenals.

Finding Winners in Actively Managed Mutual Funds (Podcast)

Previous research has shown that the average actively managed mutual fund underperforms a low-cost index fund after accounting for fees and expenses, but a new paper quantifies the size of active positions and distinguishes between different types of active managers.

Performance Reporting: Winning the Scoreless Game

Lately, academics and investment practitioners have been debating over the justification of investment management fees, hedging tail risks, and whether or not active investing is in fact a “loser’s game”. But before we lose any more sleep over the intricacies of the game, shouldn’t we first make sure it’s most valuable player is keeping score?

Impact Investing: How Do You Measure Social and Environmental Impact?

One of the toughest challenges for the growing field of impact investing is measuring and reporting social and environmental impact. The Global Impact Investing Network (GIIN) has developed a number of tools to help.

Choosing Investment Managers: A Guide for Institutional Investors

Many institutions, even the large, sophisticated plan sponsors, end up buying high and selling low when it comes to hiring investment managers. How can that be?

Returns on Negative Enterprise Value Stocks: Money for Nothing?

Negative Enterprise Value stocks have offered attractive returns over the past 40 years and may be well worth a look.

Do Dividends Create Shareholder Value?

Berkshire Hathaway has never paid a dividend, yet Warren Buffett extols the dividends the company receives. What gives?

Where Is Risk Hiding Now? Pandas, Tail Risks, and Safe Havens

The efforts of some financial institutions to quantify value at risk (VaR) and other uncertainties, and to establish an effective culture of risk management, have blown up spectacularly at both an organizational and a portfolio level.

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