Innovations in financial markets research over the last fifty years are the keystone of a belief system that guides Alman Partner’s approach to investing. Today, the investment industry takes for granted the calculation of rates of return and the availability of comparative universes for professionally managed funds. But before the mid 1960s, there was neither a generally accepted way to calculate a total return nor a way to compare the returns of different funds. This all changed with the advent of computers and the collection of data for mutual funds as well as for individual stocks and bonds.
Rigorous testing by financial economists of that seminal era led to the development of asset pricing models to evaluate the risk/return characteristics of securities and portfolios, and also led to a theory of market efficiency that suggested excess returns were only achievable by taking on above-market risk. Studies documenting the failure of active managers to outperform market indexes gave rise in the early 1970s to passively managed index funds that relied on capital markets as the source of investment returns.
Further research and data compilation over several decades led to the identification of the multiple equity asset classes and risk dimensions that form the basis of Alman Partner’s strategies.