The search for alpha is a never-ending quest. Years ago, certain factors were “discovered” to deliver incrementally better returns in the long run; small caps and value tilts, for instance. Slowly but surely, as more investors sought fled to this style of investing, these factors stopped outperforming. Such is the difficulty of (semi-)active management. As potential areas of outperformance become widely known, alpha dwindles there and begins to sprout up in other places. Markets evolve into a perpetual cycle of chasing performance factors.
📰 Thoughts on the search for alpha
📰 Thoughts on the search for alpha
📰 Thoughts on the search for alpha
The search for alpha is a never-ending quest. Years ago, certain factors were “discovered” to deliver incrementally better returns in the long run; small caps and value tilts, for instance. Slowly but surely, as more investors sought fled to this style of investing, these factors stopped outperforming. Such is the difficulty of (semi-)active management. As potential areas of outperformance become widely known, alpha dwindles there and begins to sprout up in other places. Markets evolve into a perpetual cycle of chasing performance factors.