Alpha Generation: New vs. Old Approaches

Alpha Generation: New vs. Old Approaches

Fundamental analysis, as well as value investing, has been around for a long time. Legendary investors like Warren Buffett and Benjamin Graham have employed this approach successfully throughout their careers. However, as the structure of financial markets has evolved, new ways of generating profits have also come to light. These are more quantitative in their approach than the old-school value investing style. Both the old and the new ways of generating alpha have their benefits and drawbacks. Explore them below.

New Approaches

Quant Investing in Asia: The Role of Low Volatility (Eastspring Investments)

There are several characteristics of quant strategies that appeal to allocators. These include the structured, systematic and repeatable investing approach.

Trend Following in Uncertain Times (Coinbase)

Alpha generation is becoming more difficult. Digital assets can offer a new set of opportunities. This paper explores some of the latest trends underlying a growing market.

A DoubleLine Trend-Following Strategy for Portfolio Diversification (DoubleLine)

Trend-following strategies can provide investors with more than just attractive returns. They can serve as portfolio diversifiers as well.

Are There Intraday and Overnight Seasonality Effects in China? (Quantpedia)

This paper looks at the relationship between the Fama and French factors and the expected overnight vs. intraday returns of Chinese stocks.

Old Approaches

Testing the Patience of Value Investors (TEBI)

The last decade was a difficult one for value investors. Excess liquidity and easy money have supported various strategies, calling fundamental analysis into question.

How Value Can Benefit from A New Investment Cycle (T. Rowe Price)

For compliance reasons, this paper is only accessible in certain geographies

Looking at stocks through a value investing lens, investors can spot opportunities for the upcoming market cycle. This paper provides a roadmap for this process.

Revisiting the Case Against Value Investing (Validea)

Is the old approach to stock selection dead? Value investing has been around for almost a century. Is it time for investors to abandon this process for something new?

Diseconomies of Scale in Quant & Fundamental Investment Styles (Journal of FQA)

In this article, the authors revisit the issue of diseconomies of scale, but contrast two different investment approaches – quantitative and fundamental.

Special Report

The Science of Value Investing (Special Report)

Understanding what goes into a company's valuation is more important than ever. Fundamental analysis of earnings, balance sheets, and cash flow statements can be key.