AMWatch

Making the most when markets offer the least

AQR Capital Management’s Principal Antti Ilmanen tries to tackle the low expected return challenge in a new book.

Antti Ilmanen, Principal at AQR Capital Management, in 2019 during the Nordic CFA Investment Forum. | Photo: AMWatch / Søren Rathlou Top

Across the world, investors are facing the challenge of how to cope with a future where return expectations will likely be lower than their historic averages.

AQR Capital Management Principal Antti Ilmanen has written a new book that tries to address the challenges faced by investors globally. The book is titled Investing Amid Low Expected Returns: Making the Most When Markets Offer the Least.

“In the face of today’s pressing low-return challenge, it is important that investors have an understanding of the evidence-based investment approaches available to help improve their long-term returns,” Ilmanen says in a press statement.

“Furthermore, I hope this book provides readers with the ability to invest with serenity – even in harsh financial conditions – and gives them an appreciation for the crucial role discipline, humility and patience play in the world of investing,” he adds.

Ilmanen has more than three decades of experience in financial markets and has won numerous awards throughout his career. AMWatch met the renowned financial market expert in 2019 during the Nordic CFA Investment Forum ahead of his presentation The Low Expected Return Challenge and the Nordic Answers.

”I think that the low expected return challenge is serious and even underappreciated because we haven’t experienced real pain from it yet. It will become sort of a generational challenge and, as an investor, you will need to modify your expectations for the future,” Ilmanen told AMWatch.

”When markets don’t offer returns, investors need to investigate other ways to build a properly diversified way to enhance returns,” Ilmanen said during the interview.

Throughout the book, readers will find extensive empirical evidence for the ingredients that make up an effective portfolio and a discussion of many of today’s most prominent investment topics, such as illiquid investments, market timing, ESG investing and factor investing, the statement reads.

The book concludes by reviewing how to utilize portfolio construction, risk management, and cost control practices to build a portfolio that can succeed in the challenging market environment that lays ahead.

“The past ten years challenged many investment beliefs once considered conventional investment wisdom, and reinforced often-overlooked and underappreciated investing practices,” comments AQR Managing Principal Cliff Asness and author of the book’s foreword.

“Antti’s new book authoritatively covers it all. It is a must-read for any investor looking for a blueprint to overcome the unpleasant challenge of markets having become ubiquitously more expensive over the past decade.”

Institutional investors underestimate risk, warns AQR

AQR Principal sheds light on different paths for investors to meet the challenge of lower expected returns that is about to unfold

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