Active Management

The main criticism of active management is that the cost of performance is expensive relative to passive investing and that most active managers underperform.  But funds which have a high “active share” typically outperform. “Active…

Week in review: What the Fed said

A familiar sense of anticipation settled over investors awaiting the result of the US Federal Reserve’s September deliberation. By and large, analysts and commentators expected the central bank’s interest rate-setting committee to hold firm and…

Behavioural economics and finance

The central tenets of modern portfolio theory and beliefs in rational markets have been found wanting.  Critics have observed that Sharpe’s “Capital Asset Pricing Model” (CAPM) and the Modigliani-Miller theorem were written during periods of…

Market review: slow progress

The Brexit discussions rumble on. Two and a half months on from the 23 June vote, the details of Britain’s proposed departure from the European Union (EU) remain unclear. Perhaps worried that the phrase is…

Transparency

Transparency makes investors confident they understand what they have bought and builds trust.  The global financial crisis witnessed a failure of transparency around mortgage-backed securities.  Openness helps to counter market ills such as moral hazard,…

Week in review: taxing times

It’s been another interesting week with Apple the latest multinational company to be accused of tax dodging. In market news, European inflation failed to accelerate in August, adding to concerns about the economic outlook ahead…

Long-termism

Concerns about short-termism in markets, government thinking and corporate strategy have only increased in the wake of the global financial crisis and the resulting levels of uncertainty surrounding investor and business behaviour have led to…

India: The Giant Awakens

This is indeed India! The land of dreams and romance, of fabulous wealth and fabulous poverty, of splendour and rags, of palaces and hovels, of famine and pestilence, of genii and giants and Aladdin lamps,…

Week in review: Desperate times

On Wednesday the result of the most wide-ranging survey of British businesses since the Brexit vote was released. The purchasing managers’ index showed the sharpest fall in business activity for 20 years, and follows a…

Simplicity

Simplicity is not just a business and regulatory imperative. Investor revulsion at the global financial crisis has led to a renaissance for simplicity. Certainly the complicated mathematical models so beloved in some quarters of finance…