With rising interest rates hurting bond prices, investors and financial advisers are scrambling for other options to provide stability to their portfolios. Some of them have turned to "alternative" funds, many of which claim to offer bond-like stability without exposure to interest-rate rises. Alternative funds use hedge-fund-like strategies to try to capture returns that aren't tied to broad markets. Some funds use options to limit their market exposure, for example, or place bets that certain stocks will drop in value. Professor Andrew Lo comments on the use of alternative funds.
Andrew W. Lo and his coauthors (Robert C. Merton, Monica Billio, Mila Getmansky, Dale Gray and Loriana Pelizzon) discuss the interconnectedness of global markets and the need for policy integration in a Financial Analysts Journal piece, “On a New Approach for Analyzing and Managing Macrofinancial Risks,” which appears in the March/April 2013 issue. Abby Farson Pratt, assistant editor at CFA Institute, recently talked with Lo about his team’s research as part of a series of FAJ author interviews.
Economists and financiers are thinking creatively about investing in cancer research, in desperate need of funding. Earlier this week, some of America's top cancer doctors convened in Boston for some intensive brainstorming about future research into the disease. But this particular gathering, organized by the MIT Sloan School of Management and known as CanceRX, featured a novel twist: next to the oncologists, there were renowned economists such as Andrew Lo and Robert Merton. More unusual still, there were bankers and financiers too.
Can financial engineering cure cancer? It is an outlandish question, and many might find it distasteful, but the answer might be "yes". It is worth trying to find out. This is the argument of Andrew Lo, a brilliant and entrepreneurial finance professor from the Massachusetts Institute of Technology's Sloan School of Mangement, who convened a conference to float his idea for a cancer-fighting "super fund" this weekend, following a tour to London to present his ideas.
Financial engineering failed dramatically in the financial crisis, but maybe it could be used to help persuade institutions to invest in cancer research. Professor Andrew Lo of MIT's Sloan School of Management explains how to Long View columnist John Authers.