Those who are considering investing in an actively managed mutual fund should evaluate the fund's prospectus carefully. Data from recent decades demonstrates that the majority of actively managed large and mid-cap stock funds in United States fail to outperform their passive stock index counterparts. Active fund management strategies that involve frequent trading generate higher transaction costs which diminish the fund's return.
In addition, the short-term capital gains resulting from frequent trades often have an unfavorable income tax impact when such funds are held in a taxable account.
When the asset base of an actively managed fund becomes too large, it begins to take on index-like characteristics because it must invest in an increasingly diverse set of investments instead of those limited to the fund manager's best ideas. Many mutual fund companies close their funds before they reach this point, but there is potential for a conflict of interest between mutual fund management and shareholders because closing the fund will result in a loss of income management fees for the mutual fund company.
Most mutual funds do not have board members and directors with an equity stake in the mutual fund that their manager s are administrating. In other words, the directors and board members don't directly impact the future performance of the fund.
Real active management, then, is when every manager and director has a vested interest in the success of the fund. Private equity is often real active management since a privately owned company usually has just one owner that make strategy decisions at the board level.
Goodreads helps you keep track of books you want to read. If you're an investing professional, you should already know about this book, whether you use it or not. It's a highly quantitative read that will make your undergraduate math courses valuable, literally.
It may not make you rich, and it may not make the people you invest for rich, but you will at least understand why or why not after understanding the math. If you're interested in how indexes benchmarks are constructed for specific purposes, this is the book.
If you're interested in serious m I read this book because it was recommended for Coursera course: Computational Investment I. It was my first book on Portfolio Management, although it has very good ratings on goodreads and amazon, I surprisingly found this book rather obscure and not-easy-to-follow. The book tries to do a mathematical approach to portfolio management, but mathematical formulas come out of the blue, with no previous explanation or justification.
The level of math required is not a big deal, it is just that formul Aug 21, InvestingByTheBooks. Academic financial text books have, to a large extent, focused on beta and the so called efficient market. Active Portfolio Management was groundbreaking when it was first published in as instead it was devoted to the practical process of generating alpha from a quantative angle. The print edition and the kindle version do not match. Amazon Rapids Fun stories for kids on the go.
Grinold spent 14 years at BARRA, where he served as Director of Research, Executive Vice President, and President; grinild 20 years on the faculty at the School of Business Administration at managemeht University of California, Berkeley, where he served as the chairman of the finance faculty, chairman of the management science faculty, and director of the Berkeley Program in Finance.
The book certainly covers some of the details and models used in money management tasks. Grinold spent 14 years at BARRA, where he served as Director of Research, Executive Vice President, and President; and 20 years on the faculty at the School of Business Administration at the University of California, Berkeley, where he served as the chairman of the finance kabn, chairman of the management science faculty, and director of the Berkeley Program in Mahn.
Be the first to ask a question about Active Portfolio Management. Read more Read less. It may not make you rich, and it may not make the people you invest for rich, but you will at least understand why or why not after understanding the math.
Alex Burns rated it it was amazing Nov 02, Beside of showing the active way of managing a portfolio, the serious mathematical presentations through which the different theories such as CAPM are described are very convincing of how difficult it could be to beat the market.
By outlining an innovative process to uncover raw signals of asset returns, develop them into refined forecasts, then use those forecasts to construct portfolios of exceptional return and minimal risk, i. Richard Grinold and Ronald Kahn, today retired and at BlackRock respectively, share a history in academia, at BARRA and above all at the quant behemoth Barclays Global Investors where they both held leading positio Academic financial text books have, to a large extent, focused on beta and the so called efficient market.
Mobi Paradise. Grinold, Ph. McGraw-Hill authors represent the leading experts in their fields and are dedicated to improving the lives, careers, and interests of readers worldwide. This unusual book is not intended chiefly as a textbook for investment courses. The book's principal target audience is quantitatively inclined investment management professionals with some masters-level knowledge of finance. However, it could make an excellent textbook for a second-year MBA course in quantitative portfolio management; the authors mention this as a possible use of the book.
Be warned: anyone teaching a course based on this book would need to make a substantial commitment to mastering and expositing a large body of unfamiliar, analytical material.
The payoff would be a class full of students who could not complain that the course was not practically relevant.
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