Guest Viewpoint: Jim Hawley and Jon Lukomnik

Media Coverage October 1, 2018

Full article available on  Investment & Pensions Europe (IPE)
By Jim Hawley and Jon Lukomnik

Summary 

It is fitting that we launched our ‘Purpose of Asset Management’ paper in London, not far from 221b Baker Street, the home of the famous fictional detective, Sherlock Holmes. 

It is time to evolve modern portfolio theory (MPT) – and our conception of investing – to include systems-level investing and beta activism. Let us look at facts rather than be enslaved by theories, no matter how accepted. Investors try to change systemic risks and thereby affect beta. Sometimes they succeed. When they do, the whole market benefits.

Investors have not accepted that they need to accept systemic risk. As their actions show, systemic risk can be mitigated.

So why has the conceptual implications of this type of beta activism not been recognised more widely? We believe there are four reasons.