Bernd Scherer


When I went to university you could teach asset management, asset pricing and corporate finance from one corporate finance book. All you needed was a different focus on different chapters. However, understanding asset management as it is practiced today needs an extended knowledge set. Drawing on my involvement in the asset management industry during the last 22 years, this book reviews portfolio construction, risk management, asset owners and their investment problems as well as the business of asset management. Readers receive a well-guided tour that aims to keep the maths accessible.


Chapter 1 reviews the theoretical underpinnings of mean variance investing, the use of characteristic portfolios and some rivalling heuristics. Chapter 2 offers various case studies on mean variance investing in particular the introduction of outside shadow assets. In Chapter 3 we focus in much more detail on diversification-based investing, while Chapter 4 extends the topic of diversification by adding frictional diversification costs. Chapter 5 takes an even more focused approach to risk parity investors. We deviate from the mean variance framework by looking more

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