Institutional Investment:: education committee “strive to minimise complexity”
Wednesday, 14 November, 2012 Leave a comment
“The delicate balance to strive for is the minimum level of complexity necessary to obtain the desired portfolio”
In other words, the new way to design portfolio is NOT to minimise portfolio covariance but complexity…admittedly this could have been written by Ontonix.
But I PROMISE it wasn’t!!!
I don’t mind admitting that, although I read plenty of “in depth” reports, this one lost me pretty early on. Hardly surprising since it was written for an institutional investor market: “…endowment funds, pension funds, foundations, insurance companies, and private family investors—the limited partners in hedge funds and in private equity funds”.
However, I understood as much as I (or anyone else) should need to appreciate that complexity IS a challenge that too few in the sector like to admit.
“It is better to have visible complexity that is controllable rather than the appearance of simplicity with uncontrollable complexity underneath”
Prof Andrew Lo