Business Cycles in an Capital Market and Macroeconomic Framework
Business cycles are fluctuations in economic activity that follow a wave like pattern. While generally simplified into a single wave, …
equity
Types of Active Management Strategies
Active equity investing may reflect a variety of ideas about profitable investment opportunities. However, with regard to how these investment …
Index Construction Methodologies
The construction of an index starts with the method of identifying stocks to include; this method can be exhaustive (every stock in …
Long/Short, Long Extension, and Market-Neutral Portfolio Construction
Benefits of Long-Only Investing Long-term risk premiums, such as the market risk premium, are earned by investors going net long securities. The capacity …
Well-Constructed Portfolio
A well-constructed portfolio should deliver the characteristics promised to investors in a cost-efficient and risk-efficient way. The well-constructed portfolio possesses: a clear …
Risk Budgeting
Risk budgeting is a process by which the total risk appetite of the portfolio is allocated among the various components …
Active Share and Active Risk
Investment approaches can also vary according to whether the manager is highly benchmark-aware or is benchmark-agnostic (i.e., pays little attention to the benchmark). Each …
Approaches to Portfolio Construction
A manager’s portfolio construction process should reflect her beliefs with respect to the nature of her skills in each of …
Fundamental Law of Active Management
Integrating the Building Blocks: Breadth of Expertise A manager may be more or less successful at combining these three sources …
Building Blocks of Active Equity Portfolio Construction
Investors who pursue active management are looking to generate portfolio returns in excess of benchmark returns (adjusted for all costs) …