Category: Reviews

Many investors underestimate how important liquidity is, and the risks they face when it isn’t there.  How do you know the price of any asset? For the big shares on the stock market it is easy. Hundreds of thousands of shares in Apple or Amazon are bought and sold every day, and the price is…
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Hedged mutual funds (HMFs), or long/short funds, are the fund industry’s answer to illiquid hedge fund strategies. The premise of long/short funds is that the managers can apply their security selection skills to a broader opportunity set (both long and short, instead of long only). Their hypothesis is that the broader opportunity set should make…
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I have been going on about the existence or non-existence of systematic risks factors like value or momentum for so long, that all my readers will by now be familiar with the seminal paper by Cam Harvey, Yan Liu and Heqing Zhu where they test more than 300 different risk factors identified in the literature. I…
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Money worries are one of the biggest causes of stress in our lives, and they affect people of all ages and income levels. The best way to start addressing those worries is to talk about them, but of course many people are very reluctant to. Here are three main obstacles that stop us opening up…
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Robin writes: There’s nothing wrong with active fund management in principle; the problem is, it’s just too expensive, as Larry Swedroe’s latest article explains. Four Dutch researchers analysed the performance of more than a thousand Luxembourg- and Ireland-based equity and fixed-income UCITs (as mutual funds are known in Europe) between 2008 and 2020. Before costs,…
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The persistently poor performance of actively managed funds has led investors to shift capital away from actively managed mutual funds to passively managed funds, such as index funds, with much lower expense ratios. However, even for index funds, the expense ratio — the only observable and reported cost — is not the only significant cost…
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While there’s no longer any debate that active management underperforms in aggregate, the majority of active funds underperform every year, and the percentage that underperform increases with the time horizon studied. If an investor were able to identify the few future alpha generators, active management could be the winning strategy. The logical strategy, as is…
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