Lindsey Morris is a trader at North Circle Advisors, an investment management firm and adviser to a suite of value-oriented equity mutual funds. Will Beamon, portfolio manager for the firm’s flagship large-cap value fund, the Ogive Fund, is explaining its investment strategy and objectives to Morris. Morris wishes to know how the Ogive Fund’s underlying trading motivations may impact trade urgency and alpha decay. Beamon notes the following relevant characteristics of the Ogive Fund:
- Seeks long-term outperformance vs. S&P 500 by investing in undervalued companies
- Evaluates company fundamentals to identify persistent mispricing opportunities
- Has a three-year average holding period
Question
Q. Determine, based on Beamon’s description of the Ogive Fund’s characteristics, his likely inclination to aggressively implement the fund’s strategy. Justify your response.
Solution
Beamon is likely to take a measured approach in implementing the Ogive Fund’s strategy.
In particular, trade urgency, which refers to how quickly or slowly an order is executed over the trading time horizon, is likely to be low for the Ogive Fund. Greater trade urgency is associated with executing over shorter horizons, whereas lower trade urgency is associated with executing over longer horizons. To capitalize on views related to mispricing, the Ogive Fund’s individual positions may be held for several years. Minimal trading is required, and any necessary trading can often be carried out in a more patient manner. Additionally, the return payoffs associated with the Ogive Fund’s long-term investment views and value orientation are not likely to be rapidly acted on by other market participants. Thus, the rate or level of expected alpha decay, which refers to the erosion or deterioration in short-term alpha once an investment decision is made, is low.
我的回答：
His likely inclination to aggressively implement the fund's strategy is low.
The reason are as follows:
1. The trade urgency is low, given the fund has 3-year average holding period and seek for long-term outperformance
2. the fund is looking to identify persistent mispricing opportunities, so the speed of alpha decay is low and the fund is not intend to capture short-term alpha.
So there is no need for the fund to execute his trades aggressively.
请问我这样回答可以吗？标准答案中“ take a measured approach in implementing the Ogive Fund’s strategy. ”这是什么意思？需要回答到这个点么
感觉标准答案中有几个定义的阐述，比如
- trade urgency, which refers to how quickly or slowly an order is executed over the trading time horizon
- the rate or level of expected alpha decay, which refers to the erosion or deterioration in short-term alpha once an investment decision is made, is low.
- Greater trade urgency is associated with executing over shorter horizons, whereas lower trade urgency is associated with executing over longer horizons.
这三句话必须要写出来吗？
