Quants Part I – Are Quants the Chiropractors of Finance? - Investment Innovation Institute

Introducing the MarketFox Column

The Fox Knows Many Things, but the Hedgehog Knows One Big Thing

The Investment Innovation Institute [i3] is very pleased to welcome Daniel Grioli as a columnist to our educational bulletin, [i3] Insights.

Daniel is the author of the outstanding investment blog: www.marketfox.org in which he generously shares his experience and knowledge gained through many years of investing for large institutions.

He is currently a senior investment professional working for a multi-billion dollar pension fund in Australia, but the views expressed in this column and in his blog are his own personal views and do not necessarily reflect the views of his employer.

To kick off the new column, Daniel will analyse the most prevalent arguments used in the active versus passive debate and discuss their merits in a three part series.

This long-standing debate has been given a new impetus through the rise of factor investing, the continuing regulatory pressures to lower fees and the increasing scale of pension funds.

In the first part, Daniel discusses nine arguments that are often used to support the notion that active management is a bad idea, but he shows they are either weak or apply in some circumstances but not others.

For those of you who want to dive even deeper into this topic, he has published an additional four arguments on his blog, which includes a provocative discussion on why he believes looking for the best managers is a waste of time.

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[i3] Insights is the official educational bulletin of the Investment Innovation Institute [i3]. It covers major trends and innovations in institutional investing, providing independent and thought-provoking content about pension funds, insurance companies and sovereign wealth funds across the globe.