Practical analysis for investment professionals

alpha


Beating the Market: Four Mistakes to Avoid

Active management is a tough gig. But knowing what does not work at least gets investors a step closer to finding their own secret sauce. Here are a few suspicious approaches some active managers pursue. Rather than adding alpha, these are more like illustrations of how not to beat the market.

There’s Alpha in Your (Right) Brain

Modern investing is a numbers game, an analysis game, an equations and computers and data game. And so when CNBC reports that alpha is at a three-decade low, it… READ MORE ›

Nobel Laureate Robert Engle on High-Frequency Trading and Portfolio Management

In the second part of our interview with Nobel laureate Robert Engle, he discusses the application of ARCH models in high-frequency trading and how he thinks risk models should be applied in portfolio management.

Emerging Market Debt: An Overlooked Source of Alpha?

After the global financial crisis, emerging market debt was a rising star. Yet, since last fall these markets had steadily lost ground. Now that these markets appear to have stabilized in recent months, are there opportunities for investors? If so, are these opportunities beta or alpha? In other words, can you jump in with both feet or do you have to be selective in what you invest?

What Makes Emerging Market Debt Tick?

Three factors make emerging market debt tick: country risk, mostly driven by fiscal conditions, i.e., internal balances as it is often known; currency risk, driven by balance of payments or external balances and the resulting reserve positions; and corporate credit risk, i.e., company balance sheets.

How to Move ESG from Philosophy to Alpha Generator

Many investors are incorporating environmental, social, and governance (ESG) factors into their equity analysis as a source of alpha.

Weekend Reads for Finance Pros: Math, myRa, and Magic

I was in Garden Grove, California, this week for CFA Institute's Wealth Management 2014 conference. There were many great presentations, but one loomed large for me: the session on elder care planning. At the outset, we polled delegates on the percentage of their clients that have a plan in place for long-term care costs. Fifty-five percent said "less than 25%." That's a very worrisome — although not altogether surprising — result when you consider that at least 70 percent of people over 65 will need long-term care services and the fact that most people don't realize Medicaid does not cover long-term care expenses.

Behavioral Intelligence: Can It Help Managers Generate Alpha?

Can a better understanding of behavioral finance, that is, behavioral intelligence, translate into improved investment returns? Opinion may be divided, but research suggests that it can.



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