Practical analysis for investment professionals

active management


The Active Equity Renaissance: Understanding the Cult of Emotion

“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."

Research Analysts Add Value: Here’s Proof

Post-event analyst forecasts — those made subsequent to recent results or management guidance — are significantly more accurate than management forecasts, reports Jeremy Monk. And if analysts can provide insight into tangible measures of value, then we can presume they are also able to offer insight into other, less tangible measures of value, such as management quality and industry outlook.

Best of 2016: Top Stories for Investors

There were so many important stories for investors this year, from US productivity, to stock buybacks, to the rise of populism. Jason Voss, CFA, provides his list of the most captivating content he's read in 2016.

Relationship Strain: The Sins of the Active Manager

The relationship between investment consultants and active investment managers is frequently a strained one. What are the biggest mistakes an active manager can make to complicate the collaboration? We asked CFA Institute Financial NewsBrief readers what they thought, and Jason Voss, CFA, analyzes the results.

Active Management: Value Beyond Returns?

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?

Is Active Management Dead? Not Even Close

Rumors of active management's demise are greatly exaggerated, AthenaInvest's C. Thomas Howard tells Jason Voss, CFA, and he has the evidence to make his case and the tools to help change active management for the better.

Academic Finance as a Check on Pretensions

Investment professionals recognize that the markets are messy places, filled with less than rational participants. From their perspective, this can obviate any further discussion about the value of academic finance and its models. But this puts too high a threshold on the measure of academia.

Alpha Wounds: Lack of Independent Judgment

Active managers are often viewed as Sherlock Holmes-style detectives gathering facts, interviewing witnesses, and developing theories to inform their investment judgments. In the latest edition of his Alpha Wounds series, however, Jason Voss, CFA, argues that this perception rarely reflects reality.

The Bedrock of Due Diligence? Skepticism and “Cracking the Narrative”

Research analysts must rethink due diligence and manager selection, says Tom Brakke, CFA. Performance chasing doesn't work, and at the end of the day, an analyst's job is to crack the corporate narrative and tie the "what" to the "how." The best due diligence, Brakke says, is "field work."

Alpha Wounds: Short-Termism

Short-termism is a major alpha wound that hurts the performance of active investment managers. Short-termism leads to higher trading costs, makes it harder to properly evaluate the management of businesses, imposes time constraints that prevent investment strategies from reaching full flower, and increases bias. New research demonstrates this pressure is coming from clients rather than from investment managers themselves.



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