In contrast to the Yale model, a passive approach has produced the best returns over the past decade and is likely to remain the best investment strategy in the future for individual investors.
Category: English
Like private investors over the last decade, the vast majority of institutional investors would have been better off managing their funds passively with negligible costs.
Instead of following blindly historical data, investors can integrate subjective views. This is mostly justified in case of market anomalies, but dangerous in panic situations.
A factor approach can lead to excessive transaction costs, increasing liquidity risk or entering complex derivative transactions.
Various forecasters have changed their view of the dollar and now expect a robust development rather than weakness due to a possible rise in interest rates.
Categories
Factor investing: Theory
Factors are investment characteristics and investors expect premia through exposure to the corresponding risks
Numerous studies have revealed that on average, the investor will lose his bets with the market. With passive investing, you invest in a collection of stocks representing the market.
Risk Parity aims at designing a long-term and robust portfolio with minimal maintenance
Risky money should provide you with (erratic) growth and safe money will limit the overall short-term changes of your wealth
You cannot know the evolution of market prices. Nevertheless, you can decide in which types of assets, with different risks, you want to invest.
