In 2009, we published a paper titled “Behavioral Risk” that described the universal tendency to make poor investment decisions in times of crisis because individuals typically allow instinct and emotion to override objective analysis of the pertinent data. The ideas in the paper remain as pertinent as ever. To return investors’ attention to this important topic, we are republishing the paper with comments that reflect the ideas in light of the current environment.
No. We continue to advise small overweights to Asia ex Japan or emerging Asia relative to US equities, but would not suggest investors add more substantial overweights unless they have an exceptionally long time horizon and the ability to tolerate substantial volatility. The risks to emerging markets are well known. Commodity weakness, a slowdown in…
Well-diligenced private investments in a skillfully constructed portfolio are important growth drivers that have helped pension funds deliver superior performance and increased the probability of meeting or exceeding long-term required returns.
Investors should be wary of modifying their bond exposures solely based on what they think interest rates might do, and focus instead on bonds’ role in the portfolio and on mitigating risk/return asymmetry at current yields.
Advice in Brief The consensus view that a global recession is not imminent seems reasonable, but the possibility cannot be ruled out. This keeps us looking for bargains, but leaving the bar high, as most assets are not cheap and what is cheap is generally cyclically oriented. Asian emerging markets or Asia ex Japan equities…
September’s publication summarizes two articles addressing sustainability issues in an investing context. The first suggests that security analysts who consider a broad dataset beyond financial data in making investment decisions may develop unique insights, and the second argues that firms with good performance on material sustainability factors outperform firms with poor performance.
The answer depends on what kind of investor you are.
For value-biased investors, energy master limited partnerships (MLPs) are (somewhat suddenly) more appealing than they have been in several years.
While by some metrics low volatility stocks appear richly valued today, low volatility strategies are still relevant to many investors and can play an important role in portfolio construction.
July’s publication summarizes three articles addressing risk factor investing. The first argues for the inclusion of a diversified factor strategy in a portfolio, the second outlines a broad framework aimed at identifying appropriate factors, and the third calls for higher statistical hurdles to test newly discovered factors.