|
|
Beverly Chandler, Opalesque London: Asia Pacific hedge fund industry veteran Peter Douglas at GFIA has taken the time to do an end of year reflection on his 28 years’ exposure to the world of professional investing - a figure which if you include the experience of GFIA’s many analysts over the years, perhaps aggregates up to 50
or 60 years. In this month’s research insights, Douglas produces seven commandments, triggered, he explains, by a combination of a review of the management of some funds of
funds that the firm ran in the mid-2000’s, and some long plane rides catching up on a mix of
great research and product pitches.
Here is an edited version of GFIA’s seven commandments. Find the full text at GFIA.
1. Size matters.
For alpha-seeking investors, this is the first commandment, Douglas writes. "Alpha comes in small
packets. An investment proposition with a certain set of characteristics, $x of assets
will not be the same at $y of assets. A simple thought experiment: in a market of say
US$1bn market capitalisation, an investment of US$1bn is the market, and hence is pure
beta. An investment of zero is pure alpha (it has no correlation to the market). Scaling
any investment up ad absurdum will change alpha into beta. The question, of course,
is at what point does your scarce alpha start to morph into beta. GFIA has done much
research over the years in its own backya...................... To view our full article Click here
|
|
RSS
