larry swedroe

Different Types of Skill

The prevalence of security analyst skill stands in stark contrast to studies that show only a fraction of actively managed mutual funds outperform on a risk-adjusted basis. Larry Swedroe tackles new research into this apparent contradiction. I recently came across an interesting paper, published in March 2018 on SSRN, titled “How Skilled Are Security Analysts?”,…

A Factor-Based Exploration of the ‘Sin’ Stock Anomaly

Larry Swedroe unpacks the results from a pair of studies that undertake a factor-based analysis of the “sin” stock premium. While socially responsible investing (SRI) and the broader category of environmental, socially responsible and governance (ESG) continue to gain in popularity, economic theory suggests the share prices of “sin” businesses will become depressed if a large…

When Manager Skill Is Really Factor Exposure

Larry Swedroe unpacks a recent study suggesting that, when selecting active mutual funds, investors confuse loading on common factors with managerial skill. Extensive and readily available data show that the persistence of active managers’ outperformance is well below what we would expect from pure chance (randomness). Making matters worse is that the equity managers who…

Don’t Write Off Value

Larry Swedroe takes a look at the data and builds his case for why investors should continue to expect a value premium going forward. Recency bias—the tendency to give too much weight to recent experience and ignore long-term historical evidence—underlies many of the mistakes commonly made by investors. It’s particularly dangerous because it causes investors…

Managing Risk With Factors

Larry Swedroe unpacks an illustration supporting factor diversification for portfolio efficiency. The holy grail of investing is the search for investment strategies that can deliver higher expected returns without increased risk, or the same expected return with reduced risk. In our 2014 book, “Reducing the Risk of Black Swans,” my co-author Kevin Grogan and I…

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