CAIA Viewpoints offer a summary-level look at industry trends and models that continue to shape alternative investment strategies. Each Viewpoint links to the full text of the paper as it appeared in CAIA journals.

August 07, 2018
A Misdiagnosed Problem

“Reconsidering Hedge Fund Contagion” by Richard Sias, H.J. Turtle and Blerina Zykaj provides an alternative, and contrary, view of hedge fund contagion, hedge fund crowding, hedge funds’ role in the 2007–2008 financial crisis, and hedge funds’ role the 2007 quant crisis.

June 27, 2018
Patience as An Alpha Source

Igor Yelnik of ADG Capital Management wrote the paper "Patience Premium", which introduces the eponymous notion which is based on the concept of ambiguity aversion and ultimately can be defined as an ambiguity premium. The paper identifies three reasons for the existence of the patience premium: certainty preferences, comparison with peers, and loss aversion. The phenomenon of the patience premium helps explain why the performance of investment strategies may benefit from having longer holding periods.

June 26, 2018
A New Target

The paper titled "Designing the Future of Target-Date Funds" revisits target-date fund designs and single manager structures to address the failure of target date strategies to guard against today's heightened retirement risks. The authors indicate that most retirement plans still use traditional designs that were adopted years ago, but fiduciary standards have changed.

May 30, 2018
Is It Time Yet?

In “Market Timing: Opportunities and Risk,” Wim Antoons explores opportunities for enhancing returns using tactical asset allocation and market timing, as well as the challenges posed by market timing, including higher costs and the risk of missing the best-performing days of the market.

May 30, 2018
High Volatility in Low Volatility Equity

In “Tactical Timing of Low Volatility Equity Strategies” by Sanne de Boer and James Norman, the authors attempt to tackle two common concerns about the timing of an allocation. The first is that relative valuation of low volatility stocks may be expensive compared to the rest of the market, so they should wait for more attractive levels. The second is that low volatility stocks, which tend to pay higher dividends, may under-perform against the back-drop of potential rate increases.

April 19, 2018
The Quantamental Approach

In the paper, “Adding Alpha by Subtracting Beta: A Case Study on How Quantitative Tools Can Improve a Portfolio’s Return” by Chris Martin, the author introduces various quantitative tools and uses a “real world” portfolio to illustrate how one could improve a portfolio’s realized returns.

March 30, 2018
Collaborative Model: A New Approach to Invest in Innovation & Energy

To address the many inefficiencies with traditional methods of investing, the authors of the paper titled “From Theory to Practice: The Collaborative Model for Investing in Innovation and Energy” argue that an increasing number of beneficiary organizations, such as pension funds, sovereign wealth funds, endowments and foundations, are adopting a new model of long-term investment management. 

March 27, 2018
Can Cash Remain King?

Professor Benton E. Gup focuses on money and payments in the United States and attempts to address historically what defines money, and how it becomes a form of accepted payment, in the paper titled "What is Money? From Commodities to Virtual Currencies/Bitcoin".

February 26, 2018
Private Debt Graduates

Sanjay Mistry and Tobias Ripka of Mercer Private Markets highlight the importance and growth of private debt in “Private Debt in an Institutional Portfolio.” The authors assert that, as an asset class, private debt is attractive on a risk-adjusted basis and can play different roles in the portfolio context, and directly plays into the financing void which has arisen post the global financial crisis.

January 24, 2018
Yields Go Low, We Go...

In this paper by AQR titled “Asset Allocation in a Low Yield Environment”, the authors question the premises behind the preference for strategic risk diversification in light of the low yield environment, and find that it continues to be sound.