for which of these are managers more risk averse?and why?
I would say more averse to total risk (systematic + unsystematic) because unsystrmatic can be diversified away and you are not rewarded for holding it. Active risk can be rewarded with alpha
more averse to active risk because unsystematic risk can be diversified away
hmmm,let me refresh your memory mates…(this is all under semi-active investing) more risk averse to ACTIVE risk cause 1.you have to believe that active risk even exists to pursue semi active management and not index completely 2.you have to believe that you can choose the right active managers to achieve alpha 3.managers fear that when pursuing active risk might be judged strictly from superiors because one can simply index and not risk it at all… 4.as one chooses active managers to get alpha he reduces diversification p.s i know i know,someone now thinks…where the fuck did he find that material!!!well volume 4 page 256!
remember those believes…
somewhere it says that successful managers’ strategies could be copied… Anyone know where it is?