The Green Zone… Assessing the Quality of Returns

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In golf it is the “fairway.” In baseball it is a “fair ball.”  In football it is “in bounds.” In portfolio management, say our authors, there also is a name for it:  The “green zone.” Portfolio managers are in the business of producing distributions of returns.  In so doing, they take risk on behalf of their clients. If, over time, they take too little risk, they may not be earning their fees.  If they take too much risk, they may be putting their clients’ assets in jeopardy.  The green zone is the authors’ name for the range for risk taking that is agreed upon as appropriate in the context of a portfolio management assignment.

Authors: Robert Litterman, Ph.D., Jacques Longerstaey, Jacob D. Rosengarten and Kurt Winkelmann, Ph.D.

In golf it is the "fairway." In baseball it is a "fair ball."  In football it is "in bounds." In portfolio management, say our authors, there also is a name for it:  The "green zone." Portfolio managers are in the business of producing distributions of returns.  In so doing, they take risk on behalf of their clients. If, over time, they take too little risk, they may not be earning their fees.  If they take too much risk, they may be putting their clients' assets in jeopardy.  The green zone is the authors' name for the range for risk taking that is agreed upon as appropriate in the context of a portfolio management assignment.

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