James Montier on Today's Investment Fashions
Montier snaps at smart beta and risk parity.
(Maxwell) Smart Betas
James Montier of GMO's asset-allocation team (striking a blow against grade inflation, that appears to be his official title) is among the fund industry's top writers. He tackles important subjects, glides past the distracting details without oversimplifying, and knows his material. His letters are on my short list.
I quite enjoyed this month's paper, "No Silver Bullets in Investing (just old snake oil in new bottles)." In the article, Montier spanks two current investment trends, "smart beta" indexing and the "risk parity" approach of asset allocation. (As a bonus, he finishes with a brief but useful overview of how different assets tend to fare against inflation. I'll touch on that subject in tomorrow's column.)