Do Portfolio Managers Underestimate Risk by Overanalyzing Data?

While new technologies and globalization have brought many changes to the practice of money management and investing, the one thing that has remained constant for most investors is the desire to beat the market. Recently, many portfolio managers have seen smart beta strategies as easy ways to do better than average. Smart beta strategies are based on calculating some attribute of each stock that is fairly simple to measure, such as the ratio of the company’s book value to its market value. The investment portfolio is then tilted toward stocks with high measures of this smart beta and away from stocks with low measures. The hope is that this tilt increases the portfolio’s return without increasing the risk.

filed under: Uncategorised

0 thoughts on “Do Portfolio Managers Underestimate Risk by Overanalyzing Data?”

Comments are closed.