Asset Management

Andrew Ang

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Asset Management

Stocks and bonds? Real estate? Hedge funds? Private equity? If you think those are the things to focus on in building an investment portfolio, Asset Management: A Systematic Approach to Factor Investing, seeks to disabuse you of that notion. Ang upends the conventional wisdom about asset allocation by showing that what matters aren’t asset class labels but the bundles of overlapping risks they represent. Making investments is like eating a healthy diet, you’ve got to look through the foods you eat to focus on the nutrients they contain. Failing to do so can lead to a serious case of malnutrition—for investors as well as diners. The key is that bad times are paramount, and the fact that every investor’s bad times are different. The traditional approach, with its focus on asset classes, is too crude and ultimately too costly to serve investors adequately. Factor risks, the peculiar sets of hard times that cut across asset classes, must be the focus of our attention if we are to weather market turmoil and receive the rewards that come with doing so. Optimally harvesting factor premiums—on our own or by hiring others—requires identifying your particular set of hard times, and exploiting the difference between them and those of the average investor. Clearly written yet chock-full of the latest research and data, Asset Management will be indispensable reading for trustees, professional money managers, smart private investors, and business students who want to understand the economics behind factor risk premiums, harvest them efficiently in their portfolios, and embark on the search for true alpha.

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