Sumary of Grantham’s GMO proclaims the age of alpha returns is here again:
- MUMBAI: In a world where the popularity of passive investing is forcing asset management companies and financial planners to increasingly shift attention to passive products like exchange traded funds (ETFs) or a balanced portfolio approach, Jeremy Grantham’s GMO is proclaiming the start of a new era for alpha generation.
- In a recent note, GMO argued that it is time for asset managers to pull the “alpha lever” in their portfolio after years of dominance for beta returns (or market returns).
- According to a study by GMO’s Systematic Global Macro team, the return potential from macro equity alpha is the highest that the team has seen in over 19 years of existence.
- In 2020, where the global economy saw a synchronous plunge due to the onset of the pandemic, 2021 has been different.
- In a world of negative real yields, GMO forecasts that the return to global bonds will be negative over 7-10 years.