16657 Lecture Notes - Lecture 7: Msci, Msci World, Market Capitalization
Document Summary
Active investment managers seek to discover investment opportunities that will achieve higher returns than the market overall and their competitors. They use a variety of research techniques to determine an investments fair value with the intention of identifying assets that are currently under or overvalued. They will then buy undervalued assets and selk the overvalued assets. Technical analysis uses historical data to attempt to predict future investment price movements. Fundamental analysis is based on the principle that an investment worth can be determined by calculating the present value of its expected future payments. This attempts to calculate an investments future returns and compare the present value of that investment to its current market price. Therefore, their assets and portfolios are based on a benchmark index. Passive investment management incurs a lower cost than active management as they undertake less research and trade less frequently. Aim involves security analysts (and their pay) to identify under and overvalued shares.
