Archive September 2018
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Week InReview: September 28, 2018
"Taken as a whole, our review of the current academic literature suggests that the conventional wisdom is too negative on the value of active management. The literature that followed Carhart (1997) has documented that active managers have a variety of skills and tend to make value-added decisions, such that, after accounting for all costs, many actively managed funds appear to generate positive value for investors. While the debate between active and passive is not settled and many research challenges remain, we conclude that the current academic literature finds active management more promising for investors than the conventional wisdom claims."
From Challenging the Conventional Wisdom on Active Management: A Review of the Past 20 Years of Academic Literature on Actively Managed Mutual Funds by Martijn Cremers, Jon Fulkerson and Timothy Riley
Week InAdvance: September 24, 2018
Week InReview: September 21, 2018
Some of the world's largest banks suspect that interdealer brokers - who only broker trades between banks - may secretly be allowing buy-side clients to trade in the interdealer market.
"The traders aren't claiming any laws are being broken. But they say that - in addition to their own profits - it's threatening long-standing conventions that have helped maintain market integrity and liquidity. One senior trader at a French lender said banks often try to buy or sell bonds for clients in the interdealer market, and if those investors are also present on the platforms then their ability to trade will decrease."
Bond Dealers Say Hedge Funds Gatecrashed Their Exclusive Club
Week InAdvance: September 17, 2018
Week InReview: September 14, 2018
Tomorrow marks the 10th anniversary of the bankruptcy of Lehman Brothers. A look ahead to the next crisis, Can We Survive the Next Financial Crisis?, is a nuanced look at the important ways in which the system that led to the last crisis has become safer and also the pockets of risk that have grown since 2008.
Week InAdvance: September 10, 2018
Week InReview: September 7, 2018
The U.S. government has changed its approach in pursuing spoofing cases by charging traders under a wire fraud statute, rather than using the Dodd-Frank Act, to have more time to build a case. But proving fraud, rather than spoofing, requires more evidence, and that might give traders incentive to continue aggressive trading. (The New York Times | Sep 4)