Ease the Burden of Managing Risk
Risk remains important for many institutional investors, but dealing with it effectively takes time and energy. How investors approach it should therefore depend on their governance capacity.
read moreActive Management: Don’t Drop the Pilot
For years, we’ve advised clients to hold diversified portfolios with balanced allocations to stocks, bonds and other assets. Lately, it’s been a hard sell, especially after years of underperformance by active equity managers. But the tide may be turning.
read moreThe Death of Equities Redux
A famous Business Week article, “The Death of Equities,” concluded, “Today, the old attitude of buying solid stocks as a cornerstone for one’s life savings and retirement has simply disappeared.” Sound familiar? The article was published in August 1979.
read moreManager Diversification: Why Conventional Wisdom Is Wrong
There’s a strong case to be made that investors should diversify their exposure to passive managers more—not less—than they diversify their exposure to active managers.
read moreDon’t Blame Theory for the Credit Crunch
A paper published this week entitled The Death of Common Sense: How elegant theories contributed to the 2008 market collapse has garnered a fair bit of coverage in the financial media, resulting in headlines such as “Modern portfolio theory failing institutional investors” in Investment & Pensions Europe. But is it really true that theory led [...]
read moreAllocating to Hedge Funds Should Be a Two-Step Process
The experience of two bear markets in the past decade reminded investors of the importance of diversification. This, coupled no doubt with some envy of the “endowment model” of the likes of Yale and Harvard universities, has caused many to increase their allocation to hedge funds. While this often makes sense, we think it’s important [...]
read moreBig Data, Big Opportunity
A “big data” revolution is under way, transforming the volume and nature of data generated throughout the economy. This trend—driven by the data-intensive nature of innovations such as social networking—is highly disruptive to the tech sector, creating fresh challenges and opportunities for investors, as my colleague Chris Toub explains below.
read moreDealing with Pension Plan Deficits
In January, it emerged that Shell UK had become the latest—and probably the last—company in the UK’s FTSE 100 Index to announce it was closing its defined benefit (DB) pension scheme to new members. The news points up a dilemma facing the trustees of many large corporate pension providers.
read morePutting Recent Active Manager Performance in Context
History suggests that reports of active management’s death are premature. In fact, conditions appear ripe for a comeback, as my colleague Scott Wallace ably explained in a recent article for Institutional Investor.com’s Global Market Thought Leadership blog, attached below.
read moreThe Perils of Past Performance, Part 2
Last month, I wrote that even great investors are very likely to underperform in one of the next three-years periods. Here’s some historical evidence that even champs can sometimes look like chumps.
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