Alpha Portfolios: Appreciating real tactical risk

Alpha Portfolios: Appreciating real tactical risk

Investment managers’ fees need to be justified in two ways: managing the risk in client portfolios and making calls in search of alpha. There is a balance to be struck. Without being reckless, managers should be willing to deviate from benchmark allocations. In a world of robo advisers, where risk-evaluated portfolios can be constructed quickly and cheaply using exchange traded funds, clients rightly question the value of portfolio managers and active funds that simply track their benchmarks.

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