The lesson focuses on factor investing and style premium. The hosts, Adam Butler, Mike Philbrick, and Rodrigo Gordillo, discuss market-neutral long-short portfolios and various strategies to eliminate beta and capture orthogonal returns. They emphasize the importance of increasing diversification by adding more bets to a well-diversified portfolio. The hosts explore different types of factor exposures, such as value, betting against beta, low volatility, momentum, and quality. They also discuss the challenges of portfolio construction, the potential impact of crowding, and the non-linear nature of some relationships. The episode concludes by highlighting the benefits of alternative betas and the evolving equilibrium in the investment landscape. Listeners are encouraged to assess their comfort level and adoption timeline for incorporating these strategies into their portfolios.
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