Active Management’s ‘Genetic Defect’

“Active managers can produce persistent excess returns when it comes to their best ideas—but they only devote half of their capital to these investments,” according to a recent article in Institutional Investor that cites new CFA Institute research showing a resulting “shredding of the industry as investors have moved to passive index funds.” Turing Technology Associates founder Alexey Panchekha, who oversaw the study, is quoted: “We have discovered a genetic defect in active management as… Read More

Learning from the Hierarchy of Investor Needs

By Justin J. Carbonneau (@jjcarbonneau) —  The original “hierarchy of needs” model was developed by Abraham Maslow in 1943. Maslow proposed the hierarchy as a way to understand human motivation and later extended it to human curiosity. The hierarchy can be viewed as a pyramid with layers, which included things like “physiological,” “safety,” “belonging and love,” “esteem,” and “self-actualization”. Each part builds off the one below, and before one could move up the pyramid the… Read More

Investing Internationally: Countries or Companies?

The topic of global investing through allocating country risk was addressed in a recent CFA Institute interview with NYU finance professor Aswath Damodaran. While the goal of this approach is to minimize risk through maximizing diversified country exposure, Damodaran believes that much of it is misguided. “Here’s the strange thing: You don’t even have to leave your domestic market if you’re an American or a European to get country risk exposure.” He asserts that, by just… Read More