Active managers try to outperform their benchmark through various active bets. They obviously need to be skilled in order to be successful. But skill is not the only possible driver of active bets. Some will be the result of biases. As investors, we need to be able to untangle the impact of skill – alpha […]
The Carlyle Group is about to go public. The founders of the second-largest private equity group wish to create a vehicle that will allow them to cash out gradually. It is perfectly understandable that they would want to sell some of their holdings. What is much less obvious is why anybody would want to buy. […]
This week’s FTfm (the FT’s financial market supplement) ran an article headlined Hedge fund gains are other funds’ losses (access reserved to subscribers). It finds that hedge fund managers outperformed over the past thirteen years and that this outperformance was “financed” by a corresponding underperformance of traditional asset managers. This would be very good news […]
At a recent client meeting, a consultant stated that they favored active strategies in emerging markets even though, in developed markets, they usually recommended a passive approach. They argued that emerging markets were much less efficient than, say, the US market and that it would therefore be “easier” to add value through active management and […]
Rolf Banz spent his career in the investment industry in the US, the UK and, most recently, in Switzerland. To older people, he is known as the "father of the small firm effect". This weblog consists of a series of essays and shorter pieces on a range of issues at the intersection of institutional investment and investment theory. Please see this post for a description of the objectives of the weblog and the About page for further information on the author and the site.