CONTENTS
Preface = ⅸ
Acknowledgements = xi
List of abbreviations = xiii
1 Capital Market Revolution = 1
Introduction = 1
The rise of institutional investors = 5
The impact of technology = 18
The changing profile of fund management = 28
Efficient market theory : myth or reality = 37
Conclusion = 44
2 The Alpha and Beta of Investing = 47
Introduction = 47
Risk and return in portfolio management = 49
The capital market line = 53
The principle of portfolio optimality = 55
The market risk premium = 57
The efficient portfolio = 64
The security market line = 67
Conclusion = 70
3 Indexation = 75
Introduction = 75
Indexation and legislation = 80
A strategy that has arrived = 83
Lowering cost enhances returns = 89
Risk and benchmark selection = 94
Is there a downside to indexation? = 101
Conclusion = 108
4 Active Management = 115
Introduction = 115
Computing power : handmaiden of investment success = 118
Technology : application versus valuation = 123
Enhancing the skill factor : transforming information into alpha = 132
The role of analysis = 140
Asset allocation : global versus local = 166
Style investing = 174
Conclusion = 184
5 Absolute Return Strategies = 187
Introduction = 187
Defining hedge funds = 193
Performance of hedge funds = 199
Risk allocation : the core-satellite approach = 205
Limits to growth : liquidity is the key = 211
Transparency : a double-edged sword = 217
The technological barrier = 222
The rise of capital-protected products = 224
Conclusion = 232
6 Private Equity = 237
Introduction = 237
Defining private equity = 242
An introduction to the market in the UK = 248
Investment performance = 262
The economic impact of private equity = 267
Barriers to investing = 275
Conclusion = 280
7 Socially Responsible Investing = 283
Introduction = 283
Challenges of global investing = 286
Rise of shareholder activism = 293
Socially responsible investment = 306
Conclusion = 326
8 Concluding Observations = 331
Introduction = 331
Prospects for the future = 334
The role of investment consultants = 337
Fund management and the question of fees = 344
Focus on core competency = 349
Rise of the individual investor = 353
Who will pay for independent research? = 358
The cost of socially responsible investing = 360
Conclusion = 363
Notes = 367
Index = 385
