ESG Integration for the Masses

Historically, ESG indices have not attracted asset volumes comparable to smart beta index strategies.  This could be attributed to the fact that market participants and academics alike have struggled to link ESG-based strategies with financial performance.

As researchers shift their focus from how to study ESG to how to integrate ESG data into products and indices, two key issues related with integrating ESG data have come to light that may be the reason some market participants investors have held back from taking the plunge.

Read more

Managing risk in the real world with Nassim Taleb

We are principally practitioners, which entails a much, much more rigorous approach to risk. Academics love theories, but science isn’t about risk and survival but about what can be proved using a certain set of methods. What cannot be proved is left out. Put the science where it belongs and know the limits of science beforehand. There are many areas where we take decisions where science cannot help, so it is foolish and unscientific to be scientific about these things rather than using precautionary heuristics. Our job is to formalise a set of rules and heuristics with clearly defined things. Before silent risk, nobody tried the Bourbaki-style to formalise risk management by making everything clearly and explicitly defined and stating what can and what cannot be captured by “models” and what a payoff means. Risk is not science, it is not practice, it is not probability, it is not economics, it is not statistics. Risk is risk, a discipline on its own, with its own rigor. As a discipline it is formalisation. Read more