Tag Archives: Equity (finance)

Updates from Chicago Booth

Actively managed, but more index-like
Chicago Booth – Analyzing 2,789 actively managed mutual funds between 1979 and 2014, the researchers find that fund portfolios have become more liquid over time, largely as a result of becoming more diversified. Both components of diversification—balance and coverage—have risen sharply, especially since 2000. The level of coverage rose faster than the level of balance as mutual-fund managers poured ever more names into their portfolios.

The research captures the rise of closet indexing among active-mutual-fund managers, a phenomenon that may be caused by managers hewing toward the benchmark they are trying to outperform. While diversification has some benefits in terms of risk management and liquidity, the close resemblance of active portfolios to passive indexes might leave some investors wondering why they’re bothering to pay for active management given the ubiquitous availability of cheap, passive alternatives. more>

The Crowdfunding Conundrum

By Terry Murray – The House of Representatives recently voted in favor 407-17 of legislation that would allow non-accredited investors to make equity investments in privately held, small startup companies.

Currently, in order for an investor (that isn’t a friend or family member) to participate in a private placement memorandum the SEC requires that the investor has a net worth (excluding their primary residence) in excess of $2 million and/or an income of at least $250,000 per year for the past three consecutive years.

The crowd funding crowd has come back with the argument that anyone can go down to the local casino, or the state lottery outlet, and squander their money there, so why should the government be trying to protect these potential investors from the democratization of investor-driven startups? more> http://tinyurl.com/7edqv72