Investing Amid Low Expected Returns
Making the Most When Markets Offer the Least
Antti Ilmanen
- English
- ePUB (mobile friendly)
- Available on iOS & Android
Investing Amid Low Expected Returns
Making the Most When Markets Offer the Least
Antti Ilmanen
About This Book
Elevate your game in the face of challenging market conditions with this eye-opening guide to portfolio management
Investing Amid Low Expected Returns: Making the Most When Markets Offer the Least provides an evidence-based blueprint for successful investing when decades of market tailwinds are turning into headwinds.
For a generation, falling yields and soaring asset prices have boosted realized returns. However, this past windfall leaves retirement savers and investors now facing the prospect of record-low future expected returns. Emphasizing this pressing challenge, the book highlights the role that timeless investment practices – discipline, humility, and patience – will play in enabling investment success. It then assesses current investor practices and the body of empirical evidence to illuminate the building blocks for improving long-run returns in today's environment and beyond. It concludes by reviewing how to put them together through effective portfolio construction, risk management, and cost control practices.
In this book, readers will also find:
- The common investor responses so far to the low expected return challenge
- Extensive empirical evidence on the critical ingredients of an effective portfolio: major asset class premia, illiquidity premia, style premia, and alpha
- Discussions of the pros and cons of illiquid investments, factor investing, ESG investing, risk mitigation strategies, and market timing
- Coverage of the whole top-down investment process – throughout the book endorsing humility in tactical forecasting and boldness in diversification
Ideal for institutional and active individual investors, Investing Amid Low Expected Returns is a timeless resource that enables investing with serenity even in harsher financial conditions.
Frequently asked questions
Information
Part I
Setting the Stage
Chapter 1
Introduction
- Lower asset yields and richer asset prices have brought forward future returns. The payback time for the recent decades' windfall gains is approaching.
- Most assets are expensive compared to their history. It is not just bonds.
- Few investors have had the serenity to accept low prospective returns. Most hard choices have been delayed. Reaching for yield helps only so far.
- Good investing practices such as discipline, humility, and patience are timeless but become even more important in tough times. Focus on what you can control.
- This book's first part sets the stage. It puts the low expected return challenge and different investors' responses in broad historical context.
- The second part reviews the building blocks that may help improve long-run returns. It updates and extends evidence on market risk premia, illiquidity premia, style premia, and alpha.
- Those blocks still need to be put together. The third part covers portfolio construction, risk management, ESG, cost control, tactical timing, and bad habits.
1.1. Serenity Prayer and Low Expected Returns
Serenity Prayer versus St. Augustine's Prayer
God, grant me the serenity to accept the things I cannot change,the courage to change the things I can,and the wisdom to know the difference.1