Factor Investing Can Keep Active Management Relevant

Despite its recent troubles, active management remains relevant, but its future “lies in low expenses that allow investors to enjoy a comfortable share of returns,” according to a recent article posted on ETF.com. The article cites comments by Tom Rampulla, managing director of Vanguard Financial Advisor Service, who argues that active managers have to employ […]

Ritholtz Says Stock-Picking is Still Alive if Not Kicking

Active fund management has been losing followers but isn’t going away entirely, writes Barry Ritholtz in a recent Bloomberg article. While stock-picking has seen a host of changes, he offers several insights as to “how we got here” including the following: Beating the market is tougher than most people thought, a notion that Ritholtz says […]

James O’Shaughnessy: Knee-Jerk Investing Doesn’t Work

A quantitative investing guru who uses concrete metrics to analyze stocks, James O’Shaughnessy believes that investors get in the way of their own success by reacting emotionally, writes Validea CEO John Reese in this week’s Forbes. The article outlines O’Shaughnessy’s investment philosophy that, to outperform the market, an investor must choose a strategy and “stick […]

Asness versus Arnott: The Factor Timing Debate Continues

AQR Management founder Cliff Asness continues to argue that factor timing is “deceptively difficult,” contrary to what Rob Arnott of Research Affiliates would have you believe, says a recent article in Institutional Investor. Asness’ issue, the article says, is with Arnott’s contention that risk premia factors such as value, momentum, growth and volatility have become […]

Simple is Smart in Smart-Beta Investing

Using a database of over 20 countries, a team of British academics tested the five most popular smart beta factors to see whether they would have proven successful over time. This according to a recent article in the Financial Times. The factors studied and respective finds are as follows: Low-risk: the highest returns “come from […]

In Factor Investing, Integration is a Plus

Portfolio diversification is a known strategy for minimizing risk, but these efforts can be thwarted if the diversified securities react in a similar way to market conditions. Factor investing is designed to reduce this risk by adjusting holdings based on specific attributes, and returns have been shown to increase if several factors are combined. A […]

Factor Investing is Gaining Appeal

Many traditional investment portfolios are created by mixing asset classes to spread risk and optimize returns. However, the Financial Times recently reported on a growing shift by more sophisticated institutional investors toward a different approach referred to as “factor investing”. The idea behind factor investing is to break down securities into the fundamental issues that drive […]