Browsing: State of the Industry

State of the Industry

What If Bob Ross Was a Portfolio Manager?

Sep 14th, 2020 | Filed under: Data Science & AI, State of the Industry, Manager Selection, Newly Added, What About Beta?, Hedge Funds

By Aaron Filbeck, CAIA, CFA, CIPM Associate Director, Content Development at CAIA Association If you’ve ever watched an old Bob Ross video, you’ve probably felt a combination of relaxation and, in many cases, exasperation… “how does he do that so effortlessly?!” While there are rarely “happy accidents” in investing, IRead More


AI, What Have You Done for Me Lately?

Sep 10th, 2020 | Filed under: Data Science & AI, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Hedge Funds

By Nicolas Rabener of FactorResearch (@FactorResearch) INVESTING IN AI VERSUS AI INVESTING “AI will probably most likely lead to the end of the world, but in the meantime, there’ll be great companies.” – Sam Altman If investors are looking for that one great AI company that will also end theRead More


Humans are Not Obsolete: We Bring the Razor

Sep 9th, 2020 | Filed under: Data Science & AI, State of the Industry, Access to Alternatives, Featured Post, Newly Added

Artificial intelligence, understood in a broad sense to include Big Data and machine learning, is a vast as-yet unplumbed disruption for portfolio management and trading as for so much else. People are still trying to get a handle on it. These are fields in which there is a great dealRead More


From impact intention to impact management: Are you ready for the change?

Sep 7th, 2020 | Filed under: State of the Industry, Newly Added, Asset Allocation, ESG

By Sara Olsen and David Pritchard of SVT Group and Yuwei Shi of Middlebury Institute of International Studies at Monterey *Please take a moment to complete the brief survey at the conclusion of this article. Every investment generates or destroys social and environmental value, aside from financial return. One ofRead More


ESG Hedge Fund Managers and the Agency Problem

Sep 1st, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, ESG, Hedge Funds

Economists in general, and scholars of finance in particular, have long been concerned with the “agency problem,” the conflict of interest inherent in any relationship where X is expected, and perhaps required by law or contract, to act in the best interest of Y. The problem exists because, for example,Read More


Regulatory Bread and Circuses 

Aug 31st, 2020 | Filed under: State of the Industry, Access to Alternatives, Newly Added, Asset Allocation, What About Beta?

By Bill Kelly, CAIA Association CEO Pictured above is the bust and the borrowed line of Juvenal, a Roman poet from the late first century. His cynical reference to bread and circuses was simply to say: feed and entertain the masses and they will forget what they wanted in the first place. The announcement this week from the SEC regarding their final ruling on amendments to the definition ofRead More


Traditional vs. Modern Approaches to Shipping Markets: Gut Instinct vs. Data-Driven 

Aug 30th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added

By Richard Stephenson, CAIA – Executive Chairman at TonnEdge, and Director at Gestion Maritime Group Introduction by Alessandro Sanos, CAIA – Global Director, Commodities at Refinitiv Introduction With its silent efficiency, shipping is rarely in the spotlight. To the uninitiated, this industry could be perceived as a marginal market, butRead More


Don’t count on multiple expansion and leverage anymore

Aug 25th, 2020 | Filed under: State of the Industry, Featured Post, Private Equity, Private Debt, Newly Added

By Wu Guowei Jack, CFA – Director of Content, APAC at CAIA Association Late Cycle Risks In the private markets world, the term “late cycle risks” has been much bandied about in recent years. A combination of high-entry multiples, high leverage, and a record amount of dry powder no doubtRead More


EUROPEAN GREEN DEAL: TOWARDS A ZERO-CARBON URBAN ENVIRONMENT

Aug 20th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation, ESG

Part 1 of a multi-part series: The Role of the EU, National Governments & Local Authorities By Christos Angelis, CAIA – Director at Masterdam INTRODUCTION In light of the exciting developments in the European Union regarding the European Green Deal (EGD)[1] presented in the end of 2019, it would beRead More


What Covid-19 Teaches Us About Resilience

Aug 18th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation, ESG

In late February and early March, we witnessed what the European Corporate Governance Institute calls an “an exogenous and unparalleled” crash, during which the S&P 500 shed one-third of its value, dropping from approximately 3,300 on Feb. 20 to close at 2,200 one month later. This provided a natural experimentRead More


Do You Know Your ABZ’s?

Aug 10th, 2020 | Filed under: State of the Industry, Access to Alternatives, Newly Added, Asset Allocation, What About Beta?

By Bill Kelly, CEO, CAIA Association Perhaps the most prescient definition of alpha is simply undiscovered beta, and if you look at this idea through the quinquagenarian endowment model, you might just see the point. In the good old days, investment performance and alpha were one in the same. Along cameRead More


Putting 2020 into Perspective: Diversification May Work Better than You Think

Aug 6th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation, Risk Management, Hedge Funds

By Rodney Sullivan, CFA, CAIA, Executive Director, University of Virginia Darden School of Business US recessions are typically accompanied by declines in stock market returns and, of course, 2020 has been no exception. We are once again reminded that investing is not easy leaving many investors to wonder how bestRead More


Transparency…Democracy…Liquidity

Aug 2nd, 2020 | Filed under: Data Science & AI, State of the Industry, Access to Alternatives, Featured Post, Newly Added

The structure of financial markets has changed substantially since the 2014 publication of Michael Lewis’ Flash Boys. Much that was shocking and new then is now taken for granted. Also, the world of investments is in a sense more democratic now, with Robinhood transforming the model of retail investing, andRead More


Understanding the Limitations of Liquid Alternatives

Jul 30th, 2020 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Hedge Funds

By Shana Sissel, CAIA, Spotlight Asset Group More than a decade ago the world of alternative investments witnessed hedge-fund-inspired Investment Act of 1940 (40 Act) funds appear on the scene. Much like their private alternative counterparts, liquid alternatives offer valuable diversification benefits within traditional portfolios, but it’s important to keepRead More


Hedge Funds and Private Equity—Building Bridges—Or Not

Jul 27th, 2020 | Filed under: State of the Industry, Featured Post, Private Equity, Private Debt, Newly Added, Asset Allocation, Hedge Funds

Alternative investment managers were evolving in the context of changing market conditions even before the Covid-19 pandemic, although the virus has speeded up the process. What is emerging is an alternatives landscape where pure-play hedge funds will be rare. That is one of the conclusions of a new study byRead More


Impact Investing Won’t Save Capitalism, But Its Example Might

Jul 22nd, 2020 | Filed under: State of the Industry, Featured Post, Private Equity, Newly Added, Asset Allocation, ESG

By Michael O’Leary and Warren Valdmanis GIIN’s 10th Anniversary report highlights new records, but what’s the endgame? When the Global Impact Investing Network (GIIN) issued its first survey a decade ago, the term “impact investing” had only been coined three years earlier. Just 24 investors responded. In GIIN’s tenth anniversaryRead More


Seeking to Predict Recessions? Focus on the Forest—Not the Trees

Jul 21st, 2020 | Filed under: Data Science & AI, State of the Industry, Featured Post, Newly Added

By Keith Black, PhD, CFA, CAIA, FDP, Managing Director, CAIA Association The FDP Institute recently spoke with Al Yazdani, the chief data scientist and founder of Calcolo Analytics, regarding his forthcoming article in the Journal of Financial Data Science: “Machine Learning Prediction of Recessions: An Imbalanced Classification Approach.” The authorRead More


Socially Distant Inflation

Jul 16th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation

By Keith Black, PhD, CFA, CAIA, FDP As the COVID-19 lockdowns start to ease across the country, governmental entities often have phased approaches for opening. Smaller crowds, smaller businesses, and more socially distanced activities are the first to reopen. It may take until 2021, at the earliest, to return toRead More


Technology: Aiding and Abetting the Democratization of Alternative Investments

Jul 14th, 2020 | Filed under: Data Science & AI, State of the Industry, Access to Alternatives, Featured Post, Private Equity, Newly Added, Hedge Funds

A recent working paper for the European Corporate Governance Institute maintains that technology has the potential to make hedge funds and private equity more accessible to the retail investor. The paper, by Omololu Bajulaiye of Tilburg University, along with some other scholars begins with the non-controversial proposition that venture capital,Read More


Changes are coming

Jul 12th, 2020 | Filed under: Data Science & AI, State of the Industry, Access to Alternatives, Featured Post, Newly Added

This article was co-authored by Dr Mehrzad Mahdavi and Hossein Kazemi, Phd, CFA from FDP Institute, and William J. Kelly from CAIA Association Digital transformation, with artificial intelligence and machine learning technologies at its core, has created unprecedented challenges and opportunities across all industries.  The financial sector will be profoundly affected as demonstrated by numerous use casesRead More


Looking For Sustainability in Energy SDG Credits

Jul 9th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation, ESG

A new report by two analysts at Robeco discusses sustainability trends in energy credits, especially in the era of Covid 19. The analysts acknowledge the demand collapse that is keeping crude oil, and accordingly alternatives fuels, at very low values. Their focus is on what lies ahead for energy credits.Read More


Change is in the Air, But Will It Stay?

Jul 7th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added

By Debbie McLean, Managing Director of Global Relations at CAIA Association I’m one of five women in my family who attended an all-women’s college. Mount Holyoke was established 183 years ago to be the “Harvard equivalent” for women who were not allowed to attend the prestigious university perched on theRead More


FINANCIAL RETURNS IN REWARD-BASED CROWDFUNDING

Jul 5th, 2020 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Private Equity, Newly Added

By Victoria Dobrynskaya, PhD, associate professor of Finance at National Research University Higher School of Economics Investments in reward-based crowdfunding campaigns give backers a variety of benefits, such as enjoyment in participating in a creation of a new product, being a part of a similar-minded community, altruistic pleasure of helpingRead More


Machine Learning Goes Global

Jul 2nd, 2020 | Filed under: Data Science & AI, State of the Industry, Newly Added

A recent test of machine learning in pursuit of alpha finds results similar to what established literature already suggests in looking specifically at the value of algorithms in the US market. But this study then goes global, in a way that most of existing literature on this question has not,Read More


‘Expectations Will Increase’ on E(E)SG

Jun 30th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation, ESG

 Adam O. Emmerich of the corporate and securities law firm Wachtell Lipton in a recent memo cautioned the firm’s corporate clients that the expectations on them with regard to transparency on environmental, social, and governance matters will increase in the months ahead. His emphasis is on the social part ofRead More


The Inflation-Deflation Debate and its Implication for Asset Allocation 

Jun 28th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation, Risk Management

By Alan Dunne, Managing Director, Abbey Capital One of the key questions facing investors at the moment is whether inflation or deflation represents the bigger risk for the coming years. Economists are split on this and one of the reasons for the uncertainty is that COVID-19 represents both a supplyRead More


Variance Risk Premium: What Premium?

Jun 25th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Risk Management, Hedge Funds

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION Investing is akin to fighting in the forever war. There are long periods of peace and prosperity, but investors are frequently drawn into short-term combat, extended battles, and multi-year wars. And the cycle repeats over and over. For some of the foot soldiers,Read More


CRE Debt & the Downturn: What’s Next?

Jun 23rd, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Hedge Funds

By Matt Malone, Managing Director, Real Estate and Andrew Korz, Associate, Investment Research, FS Investments As the COVID-19 pandemic has swept across the world, it has become clear that the necessary steps being taken by governments to protect human life have thrust the global economy into a recession. In theRead More


The Allusivity Premium

Jun 22nd, 2020 | Filed under: State of the Industry, Access to Alternatives, Newly Added, Asset Allocation, What About Beta?

By Bill Kelly, CEO, CAIA Association Since this What About Beta column started about two years and almost 75 entries ago, the goal has always been to take a CAIA article, a relevant news story, or an industry trend and amplify it, replete with an occasional catchy title, and maybeRead More


SAVING THE WORLD BY ‘TECHNOLOGIZING’ INSTITUTIONAL INVESTMENT

Jun 21st, 2020 | Filed under: Data Science & AI, State of the Industry, Featured Post, Newly Added, ESG

By Ashby Monk, Executive and Research Director at Global Projects Center, Stanford University & Dane Rook, Research Engineer at Global Projects Center, Stanford University “The world needs institutional investors to save society as we know it.” Say these words to your mother, and she may check your temperature; say them at aRead More


Pursuing Diversification with Cryptocurrencies

Jun 18th, 2020 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

By Andrew Keenan, CAIA, CFA, CBP, Assistant Vice President – Valuation Risk and Control at Credit Suisse Overview The recent release of CAIA Association’s seminal report “The Next Decade of Alternative Investments: From Adolescence to Responsible Citizenship” underscored four key tenets for the investment industry to adhere to and emphasizeRead More


The Test and The Bet

Jun 16th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Hedge Funds

By Shreekant Daga, CAIA, CFA, FRM | Associate Director, Liaison Office, India | CAIA Association Sporting incidents at times draw similarities to financial matters. The below write-up compares and contracts one of the most famous cricket test matches and a Wall Street bet with a financial investment lens. The blog post takes form of aRead More


UK Stewardship Code: Stepping Up as Corporate Guardians

Jun 14th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, ESG

It has been 10 years since the United Kingdom introduced a Stewardship Code, drawn up by its Financial Reporting Council (FRC), a quasi-governmental agency. The code was meant to remedy some of the inadequacies in the system of corporate governance that, it was thought, the crises of 2007-2008 had revealed.Read More


‘HAL, Determine the Fatness of the Tail’

Jun 11th, 2020 | Filed under: Data Science & AI, State of the Industry, Featured Post, Newly Added, Asset Allocation

There has been a lot of commentary in the financial press about the idea of “fat tails,” that is, about the idea that disasters are more common than a normal or bell curve view of probability would lead one to expect. Indeed, one might even say that there is someRead More


Release the {virtuous} Kraken!

Jun 9th, 2020 | Filed under: State of the Industry, Featured Post, Private Equity, Newly Added

By Jim Bethea, CAIA, CFA: CIO of The University of Iowa Center for Advancement and John L. Bowman, CFA: SMD of CAIA Associaton The cult-like declaration has its origin in the 2010 Clash of the Titans remake. While the cast was superb and it grossed nearly $500m worldwide, it wasRead More


A Target Date for Target Dates

Jun 8th, 2020 | Filed under: State of the Industry, Access to Alternatives, Private Equity, Manager Selection, Newly Added, Asset Allocation, What About Beta?

By Aaron Filbeck, CAIA, CFA, CIPM | Associate Director, Content Development at CAIA Association While every retirement plan participant has unique life and planning circumstances, they generally (and almost evenly) split into two broad categories regarding investment philosophies: the do-it-yourself crowd and the do-it-for-me crowd. The do-it-yourself crowd typically followsRead More


Has the Corona Virus Helped to Erode the Hype Around Artificial Intelligence?

Jun 4th, 2020 | Filed under: Data Science & AI, State of the Industry, Featured Post, Newly Added, Asset Allocation

By Dr. Mehrzad Mahdavi, Executive Director, CEO Financial Data Professionals Institute According to a recent WSJ article, (subscription required) many companies have just discovered that AI is not some kind of magic sauce that could be poured over any business process to transform it into a moneymaking machin. The article also points outRead More


How Often Do Investors Google ‘Climate Change’?

Jun 2nd, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, ESG

Two scholars at Copenhagen Business School, Denmark  have devised what they call a “text-based sustainability sentiment measure,” that is, a quantification of when and to what extent concerns about climate change are rising amongst investors, with a likely consequence for the success of an ESG-oriented trading policy. The authors areRead More


Stat Arb, Algos and the Difference Between Cats and Dogs

Jun 1st, 2020 | Filed under: Data Science & AI, State of the Industry, Featured Post, Newly Added, Asset Allocation, Hedge Funds

A co-founder of Quantigic Solutions has presented what he calls “the freshmanlevel” answer to the question: why did dollar-neutral quant trading strategies, such as equities stat arb, fail so markedly during the COVID-19 market sell-off? Zura Kakushadze, a professor at the Free University of Tblisi, is on reasonably solid groundRead More


Hedge Funds and 2 Economic Crises: Focus on Systematic and Algorithmic Hedge Funds

May 28th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation, Hedge Funds

By Hossein Kazemi, PhD, CFA, Senior Advisor at CAIA Association During the Global Financial Crisis (GFC), the role of hedge funds and their potential to provide significant downside protection was hotly debated. The same debate has resurfaced earlier this year again when markets for risky assets experience double-digit declines withinRead More


Nowcasting Endowment Returns

May 21st, 2020 | Filed under: State of the Industry, Newly Added, Asset Allocation

By Hossein Kazemi, PhD, CFA, Senior Advisor at CAIA Association, and Aaron Filbeck, CAIA, CFA, CIPM, Associate Director, Content Development at CAIA Association “There are at least two kinds of games. One could be called finite, the other infinite. A finite game is played for the purpose of winning, an infiniteRead More


Diving Deeper into the Deep Learning Pool

May 17th, 2020 | Filed under: Data Science & AI, State of the Industry, Featured Post, Newly Added

Dmitry Borisenko, an independent scholar and a former quantitative analyst at Krauspartner Investment Solutions, posted a complicated article last year with the deceptively simple title, Dissecting Momentum: We Need to Go Deeper. As the title suggests, Borisenko begins with the momentum strategy as a means of reaching alpha. Variables basedRead More


Data Scientists Should Do Drugs!

May 14th, 2020 | Filed under: Data Science & AI, State of the Industry, Newly Added

By Keith Black, PhD, CFA, CAIA, FDP Now that this attention-grabbing headline has drawn you in, let me clarify. Data scientists should not partake in illegal drugs. Data scientists should participate in pharmacological research, as artificial intelligence and machine learning can add value, even when the data scientist does notRead More


Model Risk Management as Algo Trading Expands

May 10th, 2020 | Filed under: Data Science & AI, State of the Industry, Newly Added, Risk Management

The FICC Market Standards Board Ltd. (FMSB) is a London-based standards body for participants in the wholesale fixed income, currencies, and commodities (FICC) markets. It has been looking into the root causes of market misconduct, and pursuant to that research it recently published a report on the “themes and challenges”Read More


Hedge Funds Between the Economics Crises

May 7th, 2020 | Filed under: State of the Industry, Newly Added, Hedge Funds

By Hossein Kazemi, Ph.D., CFA, Senior Advisor, CAIA Program Introduction The performance of hedge funds since the Global Financial Crisis (GFC) has been hotly debated in both industry and academic studies. There is strong evidence that the GFC had a profound impact on the structure and the relative performance of theRead More


ETFs, Systemic Risks, and a Real-Time Test

May 5th, 2020 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

ETFs are one of the routes by which once alternative and elite-access-only strategies have become democratized or gone retail. As a result of this trend, we have synthetic ETFs, smart beta ETFs, leveraged ETFs, and inverse ETFs. A recent study study provides some reassurance about concerns that have motivated kickbackRead More


MERGER ARBITRAGE: ARBITRAGED AWAY?

Apr 30th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Hedge Funds

By Nicolas Rabener, @FactorResearch INTRODUCTION Working in the restructuring team of a corporate finance boutique is like being a trader focused on short-selling. Most money is made when companies falter, and stocks turn bearish. A restructurer’s cyclical counterpart is the ever-optimistic merger & acquisition (M&A) banker that thrives when theRead More


The Data, the Virus, and the Rebound

Apr 28th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation

A new paper from Loomis Sayles, a subsidiary of Natixis Global Asset Management, discusses the data, and the sort of data, that may tell investors and traders what are the likely effects of the COVID-19 pandemic, in however many mutations there may be. A familiar metaphor in such discussions isRead More


Oil Prices Went Where?

Apr 26th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Commodities & Natural Resources

By Adam A. Rozencwajg, CFA, Managing Partner, Geohring & Rozencwajg Oil prices joined bond yields in doing the unthinkable: trading at negative levels. In the case of oil, the West Texas Intermediate (WTI) May 2020 contract reached a low of -$40.32 at 2:24 pm before rallying back to finish the day atRead More


Major PE/VC Firms Back New Approaches to Quantum Computing

Apr 23rd, 2020 | Filed under: Data Science & AI, State of the Industry, Featured Post, Private Equity, Newly Added

In October 2019, Google announced quantum supremacy: the creation of a special-purpose computer using quantum processors that could perform a calculation impossible for a digital computer. A computer Google named Sycamore resolved in just three minutes a computational challenge that would have required a digital computer 10,000 years. Remarkable asRead More