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The Active Equity Renaissance

Published on March 14, 2017

CFA Institute  |  Enterprising Investor | March 2017


The Active Equity Renaissance is a series of posts by AthenaInvest Founder and CIO C. Thomas Howard, PhD, and Jason A. Voss, CFA, retired co-portfolio manager of the Davis Appreciation and Income Fund. It proposes an alternative to modern portfolio theory (MPT), pokes holes in MPT’s underlying assumptions, and discusses ways to improve active management returns.

Rejecting a Broken 1970s Model

C. Thomas Howard and Jason Voss, CFA

Collectively, active equity delivers no value to its investors and, in fact, extracts value from them. So what can be done to launch an active equity renaissance?

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Understanding the Cult of Emotion

C. Thomas Howard and Jason Voss, CFA

“I know you are afraid and you should be afraid. I will invest you in products that will not stir up your fears.” This sentiment is applied over and over again in the investment industry in one form or another, by the “Cult of Emotion.”

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The Rise and Fall of MPT

C. Thomas Howard and Jason Voss, CFA

After the dust settles, virtually nothing of modern portfolio theory (MPT) will remain, asserts C. Thomas Howard and Jason Voss, CFA. The three pillars on which MPT rests have been toppled, and it is time to move on. There is an alternative way to view securities markets, their movements, and their participants: behavioral finance.

Read the full article on Enterprising Investor


New Frontiers of Risk

Jason Voss, CFA and C. Thomas Howard

One modern portfolio theory (MPT) pillar that is unquestionably broken is the use of volatility, specifically standard deviation, as a measure of risk, Jason Voss, CFA, and C. Thomas Howard write in the latest edition of The Active Equity Renaissance series. This initial error in MPT’s development is a major contributor to active investment management underperformance.

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Behavioral Financial Markets

C. Thomas Howard and Jason Voss, CFA

Jason Voss, CFA, and C. Thomas Howard have questioned many orthodoxies of modern portfolio theory (MPT). But what do they propose to take their place? Behavioral finance.

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Renaissance Portfolio Management

Jason Voss, CFA and C. Thomas Howard

Dismantling the finance industry’s closet indexing factory is a critical step in The Active Equity Renaissance, C. Thomas Howard and Jason Voss, CFA, observe.

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Renaissance Investment Management Firms

Jason Voss, CFA and C. Thomas Howard

The primary focus of the renaissance investment management firm is delivering the best possible investment performance, not on scaling for scaling’s sake, C. Thomas Howard and Jason Voss, CFA, explain in the latest entry in The Active Equity Renaissance series.

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A Case Study: Alpine Capital Research

Jason Voss, CFA

Active equity managers can outperform their benchmarks, especially if they follow some important guidelines. Alpine Capital Research (ACR) and its CIO, Nicholas Tompras, CFA, provide a case study on how to implement these factors.

Read the full article on Enterprising Investor