Building a Better Passive Mousetrap

Michael DePalma (pictured) and Richard Abramson

In a recent blog, Passive Management Does Not Equal Passive Investing, we showed how passively managed portfolios actually create an active investment in which volatility isn’t benign and risk exposures can vary wildly over time. So if we could fix the problem and reduce exposure to spikes in market volatility, would a passive portfolio deliver better result? (more…)


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Predicting Death to Find Life in Emerging Market Stocks

Over the past year, investors have become excessively cautious about emerging markets. To compensate for the additional uncertainty, many underestimate the upside potential. Paradoxically, to get a better handle on the risks, we believe they should assume the worst. By using this “pre-mortem” approach, not only do they have a better chance of avoiding disaster, but they can also more accurately quantify the rewards. (more…)


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Time to Bench the Equity Benchmark Too?

While fixed-income investors are growing increasingly aware of the risks of benchmark-oriented bond portfolios in a period of rising rates, equity investors have recently also started to question the wisdom of cap-weighted indices. We would go even further and argue that the performance of a cap-weighted benchmark may be irrelevant for the long-term goals of many institutional investors. (more…)


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