The active versus passive investment debate
has raged within academic circles for decades
without resolution. Unfortunately for the world’s
asset owners, this has left them wondering what
game—Chase alpha? Ride beta?—they should be
playing. Editor-at-Large Joe Flood reports.
There’s a possibly apocryphal story that floats
around pension fund circles. A manager for one
of the largest corporate funds walks into an office
suite to give his quarterly presentation to the
executive policy committee. Alan Greenspan has
recently made his famous “irrational exuberance”
comment, and the company brass is discussing the
fund’s mix of stocks and bonds. One of the execs is
of the opinion that stocks have risen dramatically
in the past few years and are due for a correction,
and that the pension fund should reduce its equity
weight substantially.
PlayingTheRightGame
