Quant Radio: How Much Should You Pay for Alpha?

We often chase alpha—those elusive returns above the market average—but what’s that extra performance really worth to you as an investor? In this episode, we break down a provocative new study that flips the script on traditional investing metrics by focusing on investment utility—a measure of portfolio satisfaction that blends returns with risk tolerance.

Join us as we explore why most active equity funds may add far less value than their alpha suggests, how risk aversion plays a critical role, and why a simple 60/40 stock-bond portfolio still does most of the heavy lifting. With only 12% of active funds offering a utility boost—and that too at a median of just 7 basis points—it’s time to rethink how we value active management.

Is your pursuit of alpha actually paying off? Or are you better off with low-cost, diversified simplicity? Let’s dig into the data and find out.

Find the full research paper here: https://community.quantopian.com/c/community-forums/how-much-should-you-pay-for-alpha-measuring-the-value-of-active-management-with-utility-calculations

For more quant-focused content, join us at ⁠⁠⁠⁠https://community.quantopian.com⁠⁠⁠⁠. There, you can explore a wealth of resources, connect with fellow quants, engage in insightful discussions, and enhance your skills through our extensive range of online courses.

Quant Radio is an AI-generated podcast, intended to help people develop their knowledge and skills in Quant finance. This podcast is not intended to provide investment advice.