How much business risk is hiding in your portfolio?

In Free by Cam Hui

This is the second in an occasional series of posts on how to build a robust investment process. Part 1 was addressed to the individual investor and trader (see The ways your trading system could lead you astray). This posts explores the issues that face the professional and institutional investor. I had illustrated in the past why managers closet index. …

Do you have what it takes to succeed in finance? (Dani Rodrik trilemma edition)

In Free by Cam Hui

Dani Rodrik of the Harvard Kennedy School has outlined a trilemma of the global economy.     The Economist explained the trilemma this way: Dani Rodrik of Harvard University is the author of the best-known such critique. In the late 1990s he pointed out that deeper economic integration required harmonisation of laws and regulations across countries. Differences in rules on …

Peak robo?

In Free by Cam Hui

We all know about how the business model of the robo-advisor works. First, determine the appropriate asset mix based on the risk, return, tax regime and other specific needs of the client. Then, build the portfolio and rebalance it on a periodic basis. The typical investment process can be summarized by the following steps: Determine the target asset mix, which …

The dirty little secret behind “smart beta” investing

In Free by Cam Hui

Some minor buzz has arisen among finance academics and professionals as a result of a paper by Ronald Kahn and Michael Lemmon, both of whom are employed by Blackrock, entitled The Asset Manager’s Dilemma: How Smart Beta Is Disrupting the Investment Management Industry. Here is the abstract: Smart beta products are a disruptive financial innovation with the potential to significantly …