Le management Alpha

In the first part we have studied the beta management, better known as indexing. By opposition to passive (or beta) management, there is the active management also called alpha management. This consists on the use of analytical research, forecasts, own judgement and experience to take investment decisions on what securities to buy, to sell or to hold. Thus, the managers who believe in active management believe that it is possible to profit from the stock market through any numbers of strategies that aim to identify mispriced securities. To add the benefits of alpha management of those of beta management, we select among five European equity managers the best who have positive and persistent alpha. For each manager, we will estimate customized benchmark and report indicators of risk-adjusted performance to determine the managers to include in the satellite to improve the performance of the core.