Twenty Years discussed on Animal Spirits Podcast

Automatic TRANSCRIPT

In the market which is meany occupied by hedge fund and mutual funds deals this thing to bear in mind final point a lot of the money that is currently in factor investment is coming from active strategies so you'll find some money that was actively manage moving to factor so it's not really changing do overall overall amount of alpha strategies in the market and so from from that perspective i would say yes there's a lot of talk about factors but there's not that much flows when you think about active position versus benchmark so one of the things that we like to avoid as investors may cause were just chicken but it's just taking extreme view and so there's no reason investor has to go on value or on momentum in so how how do you sort of teach people to understand that you could use these in concert with one another in diversified through them and unfortunately diversity means you're always gonna say sorry but that these walkers complement each other right so yes as you know diversification is always challenging i think one way and that's challenging but it means you cannot always by the top performing assets i'm sure everyone will love their adviser to always recommend to them the best performing asset diversification is not a strategy that is going to be necessarily the highest performer in every year but you also know the magic compounding the magic of compounding is that if you are diversified you voted losses and so that means that you are more able to capture the upside in the market in the long run that's a very powerful concept especially for investors have influence flows in outflows into these strategies so in this case having a balanced mix of factors and this i would put value momentum quality all the obvious ones rules only is a good one so lovo you mentioned that you weren't sure what oval works and i've seen it so i work with institutional investors now for close to twenty years and i've seen you aversion to leverage you're version to leverage means that many investors are looking for high returns but they cannot use leverage so they have to buy the highest risk stocks in the highest risk strategies which pushes down the sharp ratio of these strategies if you are able to use leverage you're able to take strategies at by themselves out lower risk but where they risk adjusted returns is greater.

Coming up next