Windjammer

Vol 4 - Reading 33 Equity Portfolio management
3 approaches to equity management: Passive (Indexing), Active, and Semi-active (Enhanced Indexing).

Enhanced Indexing is variant of active investing but portfolio manager worries more about tracking risk. It frequently offers highest IR.

Within Passive (Indexing) approach 3 methods: Full replication, Stratified Sampling, Optimization. Full replication has lowest tracking risk but highest cost, Optimization has highest tracking risk, and Stratified Sampling is in between. It works best when Index has >1000 stocks and full replication becomes costly.

In the problem above, Hayes is concerned about tracking risk and wants to maximize IR which is best done by Enhanced Indexing.

Windjammer

FINE OAL29???? ITSS S. SAMPLING FROM WHCIH I MEANT STratified sampling only my dearest friend.... i never mentioned sampling i said s sampling from which i meant stratified sampling only


fine dear oal29?????????