Academic research vs practice

Friday 10 Feb 17 8:24am
Morningstar: The returns of factor investment strategies often look more impressive in academia than in practice.Often ideas don't work as well in practice as theory would suggest, says Alex Bryan

In the investment world that is often due to differences between how investment ideas are formulated in theory and how they are put into practice. Many rules-based investment strategies claim heritage to independent academic research demonstrating that certain factors like value, profitability, momentum, and small size have been associated with higher expected returns. But there are critical differences between the way academic researchers have documented those factors and how investment managers design actual strategies. More>

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