The document discusses studies that have shown a high percentage of active fund managers underperforming benchmarks over periods of 1, 3, 5, and 10 years. However, it notes that simply looking at these statistics in isolation can be misleading, as funds have different time frames and start periods for outperforming benchmarks. Considering the effects of probability, it may not be reasonable to expect a high percentage of funds to outperform at any given time period. The document encourages further exploration of alternatives to passive funds rather than automatically ignoring active managers.
Now you can learn the 12 golden rules of investing success. This is something that all most anyone can learn and apply to achieve greater financial security. Start with the basics and learn all the rules followed by successful investors. You can do this. The presentation is available for purchase from Scribd https://www.scribd.com/doc/241726833/The-12-Golden-Rules-of-Investing
Now you can learn the 12 golden rules of investing success. This is something that all most anyone can learn and apply to achieve greater financial security. Start with the basics and learn all the rules followed by successful investors. You can do this. The presentation is available for purchase from Scribd https://www.scribd.com/doc/241726833/The-12-Golden-Rules-of-Investing
Taking on Wall Street: A Comparative Study of Strategies Sourced from "The Pr...Quantopian
A unique set of data comprised of strategy returns sourced through traditional means from managers (“the pros”) and from strategies developed on Quantopian’s platform (“the crowd”) is analyzed. We detect distinct groups of strategy styles within the data: In particular, some "crowd" strategies fall into their own clusters distinct from those within the "pro" data set. A few do overlap as well. We go on to analyze the various strategy groups with respect to environmental conditions and risk factors (among other relevant features), teasing out differences in trading styles.
Ultimately we judge how well “the crowd” is doing so far, in terms of being able to compete with the established managers not only in terms of performance but also with respect to risk management and overall novelty and diversification in the trading styles that have emerged. Finally we address general notions (and pitfalls) of building meta strategies from manager return streams.
This presentation was part of QuantCon 2015 hosted by Quantopian. Visit us at: www.quantopian.com.
Avoid Dreadful Mistakes While Investing in Mutual FundsInvestmentz
If you don’t balance your earnings and spending, you will never save enough to invest which is a sure way to crash-land since you will never know when you ran out of fuel.
“Why do academics always talk about risk adjusted returns? I get that risk matters and you shouldn’t have a riskier portfolio than you can manage. But if I compare two strategies over a period, I’m better off at the end if I used the strategy with the higher return, not the one with the higher risk adjusted return. So why is risk adjusted return relevant?”
Insight Summit 2017: Intelligent Risk Taking
Portfolio construction today - Cliff Asness, Managing & Founding Principal, AQR Capital Management
Presented at the third annual Insight Summit conference held on 7 November 2017 by London Business School’s AQR Asset Management Institute.
Taking on Wall Street: A Comparative Study of Strategies Sourced from "The Pr...Quantopian
A unique set of data comprised of strategy returns sourced through traditional means from managers (“the pros”) and from strategies developed on Quantopian’s platform (“the crowd”) is analyzed. We detect distinct groups of strategy styles within the data: In particular, some "crowd" strategies fall into their own clusters distinct from those within the "pro" data set. A few do overlap as well. We go on to analyze the various strategy groups with respect to environmental conditions and risk factors (among other relevant features), teasing out differences in trading styles.
Ultimately we judge how well “the crowd” is doing so far, in terms of being able to compete with the established managers not only in terms of performance but also with respect to risk management and overall novelty and diversification in the trading styles that have emerged. Finally we address general notions (and pitfalls) of building meta strategies from manager return streams.
This presentation was part of QuantCon 2015 hosted by Quantopian. Visit us at: www.quantopian.com.
Avoid Dreadful Mistakes While Investing in Mutual FundsInvestmentz
If you don’t balance your earnings and spending, you will never save enough to invest which is a sure way to crash-land since you will never know when you ran out of fuel.
“Why do academics always talk about risk adjusted returns? I get that risk matters and you shouldn’t have a riskier portfolio than you can manage. But if I compare two strategies over a period, I’m better off at the end if I used the strategy with the higher return, not the one with the higher risk adjusted return. So why is risk adjusted return relevant?”
Insight Summit 2017: Intelligent Risk Taking
Portfolio construction today - Cliff Asness, Managing & Founding Principal, AQR Capital Management
Presented at the third annual Insight Summit conference held on 7 November 2017 by London Business School’s AQR Asset Management Institute.
Proactive Alternatives strategies for the sophisticated HNW investor with actively managed accounts. A currency hedge works well against rising interest rate volatility.
La presentación corresponde al evento:
English version: https://youtu.be/JxOIJmCO1Ao
Versión española: https://youtu.be/owp_txi4erU
Pavel Begun (cofundador de 3G Capital Management) es entrevistado en Value School por Carmen Pérez Baguena, analista senior de Cobas Asset Management.
Pavel y su socio conforman el equipo de análisis de 3G Capital, porque afirma que cuantos menos sean en el proceso de investigación, más pueden controlar el núcleo de decisión.
El entrevistado nos cuenta su trayectoria profesional, que empezó a los 11 años vendiendo fresas y manzanas en un mercado. Después emprendió varios proyectos, hasta llegar a Estados Unidos con 20 años, donde además de continuar con sus iniciativas empresariales se introdujo en el mundo de la inversión. Pavel asegura que simultanear ambas cosas le ha permitido mejorar en los dos campos.
También nos desvela que su filosofía principalmente se centra en buscar las 3G (Good): “buen negocio, buena gestión y buen precio”. Parece una máxima muy sencilla, pero realmente “es un trabajo muy duro y complejo”.
¿Cómo define un buen negocio? Negocios sencillos de entender, con una trayectoria registrada de sostenibilidad en liderazgo, negocios que den buenos retornos sobre el capital invertido (15-20% o superiores). Esto puede aplicarse a cualquier sector, con algunas excepciones. Por ejemplo, las prendas de moda, porque es un sector muy cambiante.
¿Cuál sería el buen precio de compra y de venta? ¿Cómo intentan minimizar el riesgo? Carmen Pérez Baguena no se deja nada en el tintero a la hora de preguntar. Al finalizar su entrevista, comienza la ronda de preguntas de los asistentes y de los conectados vía streaming.
Libros recomendados:
Armas, Gérmenes Y Acero (ENSAYO-CIENCIA) (Jared Diamond)
What Intelligence Tests Miss: The Psychology of Rational Thought (Keith E. Stanovich)
La riqueza y la pobreza de las naciones (David Landed)
Defined contribution (DC) plan sponsors face increasingly complex issues. Russell Investments has developed a priority list of eight ideas and actions to help plan sponsors guide their participants toward better decision-making as they save for retirement.
Similar to Compelling Arguments or False Assumption No 2 (20)
1. Ralph K. Czichon trading as Wise Directions
Chartered Financial Practitioner®
Authorised Representatives of
AMP Financial Planning Pty Limited
AFS License Number 232706/ABN 20 282 609 719
Compelling Arguments or False Assumption No 2
For many years various studies & research papers have shown that a very high percentage of
active fund managers fail to meet their respective benchmarks over 1, 3, 5, and 10 years.
Example:
In July 2015 Vanguard Research article “The case for index funds investing in Australia”
found that 62% of all large Cap Equity Funds underperformed their benchmarks over a ten
year period.
In April 2016 SPIVA’s Year-End 2015 Scored card revealed that 72.30% of the international
equity funds underperformed for one year and 86.7% and 88.2% for the three and five year
period.
Conclusion
The above observations are often used to strongly consider passive investment funds due to
their low cost opposed to active funds as they tend to be much more expensive. Therefore
why pay more when one does not get compensated or rewarded in terms of returns over and
above certain benchmarks.
Questions:
At first glance this makes a compelling argument using passive funds seeing that active fund
managers appear to do so poorly in comparison over various time frames.
Does that mean one should automatically ignore active fund managers or should the question
be asked is it actually possible to have all active fund managers outperform their respective
index at all times?
2. Consider:
Irrespective of the actual number of underperforming active fund managers at any given
time one needs to keep in mind that by default many won’t beat their respective benchmark
at many points in time.
The reason is simply because all funds have different time frame objectives, which may
range from 3 to 7 years.
Even when comparing 5 different funds with the same time frame objective to beat the
same benchmark of a 5 year period it does not mean they all started at the same time.
For example if we compare at 2016 and look back the last 5 years naturally for some funds
by default 2016 would either be 1, 2, 3, 4 years into beating a benchmark with a 5 year time
frame objective.
Lesson learned:
Looking at statistics in isolation and ignoring the effects of probability may cloud the
judgement of what is meaningful and appropriate.
The mere fact that it is probably impossible to have a very high percentage of outperforming
funds at any given time frame should not be taken as an argument that none of them do and
it is always worth exploring and considering the alternatives.
It’s worth noting that according to the SPIVA Year end 2015 Report 72.7% of Australian
mid and small cap equity funds have outperformed their benchmark by 7.70% over one year
and 70.1% and 71.1% over three and five years.
Ralph Czichon ABN 20 282 609 719 trading as Wise Directions, is an authorised representative and credit representative of AMP Financial
Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licensee.
This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any
particular person. You need to consider your financial situation and needs before making any decisions based on this information.
If you decide to purchase or vary a financial product, your financial adviser, AMP Financial Planning and other companies within the AMP Group
may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your
investment. Please contact us if you want more information.
The Example is illustrative only and is not an estimate of the investment returns you will receive or fees and costs you will incur.
If you no longer wish to receive direct marketing from us you may opt out by contacting/calling Ralph Czichon of Wise Directions, 0296355567.