A Framework to Evaluate Value Strategies

By Jack Forehand, CFA (@practicalquant) Earlier this year, I wrote about the mechanics of value investing and the many decisions that go into building value portfolios. Many investors believe that all value-based strategies will produce similar performance. But in reality, the many portfolio construction decisions that value managers make, which I highlighted in the article, can lead to major differences both in their performance and in the ability of investors to stick with their strategies.… Read More

Behavioral Return Gap: How Investors May Lose Even if a Fund Wins

The Wall Street Journal reports on the “behavioral return gap” that can cause investors to lose money even as the mutual fund they invest in shows gains over time. Investors often withdraw funds during periods of underperformance, causing them to lose money and miss the gains secured by subsequent increases in returns. “During periods of strong fund performance, investors pile in, but when fund performance is at its worst, short-sighted investors redeem in droves.” For… Read More