Many assume that active management can best the S&P capitalization indices, but that has not necessarily been the case. We open this issue with Elnekave’s discussion of the performance disparity between active and index funds. He concludes that the problems are inherent deficits in active investment management practices, identifies some of the deficits, and offers solutions. Wong examines the development of the venture capital industry in China and summarizes the difficulties encountered, followed by Grant’s presentation of the prospective valuation relationship between MVA and EVA. Zhang and Zhao evaluate investment results using the Value Line Investment Survey for both the timeliness sort and the safety sort and find that a dual-sort system offers several advantages over a single-sort system. Chincarini and Nakao examine the ability of hedge funds to time the market.
Next, Nielsen, Fachinotti, and Kang present a framework for the implementation of global equity allocation based on MSCI discussions with pension plans, asset managers, and consultants. Hjalmarsson examines the benefits of diversifying across characteristic-based long–short strategies. The usefulness of the Purchasing Managers’ Index (PMI) to forecast future stock returns is presented by Johnson and Watson, followed by Keppler and Encinosa, who revisit the idea of investing in national equity markets based on market size.
It seems that each day we are presented with a different story from news outlets: We are going into another recession. Spending is stronger than expected and there will be no recession. The purchasing index is weak; we are going into another recession. Wait, we are not. As money managers, what do we need to think about in uncertain and volatile times like these? We have put together four articles that we hope will help you deal with the daily uncertainty and find a profitable long-term strategy. Our first article in the special section is a discussion of the ability to predict bond returns using expense ratios by Domian and Reichenstein. Pfau examines the retirement outcome for 2000-era retirees versus other points in history. This is followed by Luu and Yu who present evidence of a positive risk premium of corporate bonds over Treasuries but discuss precautions investors should not ignore. With the increased interest in low-volatility, van Vliet offers ten important things potential investors should know about minimum volatility investing.
We welcome your submissions and we value your comments and suggestions; please email us at journals{at}investmentresearch.org.
Brian Bruce
Editor-in-Chief
- © 2011 Pageant Media Ltd