There is an interesting article by Andrew Ross Sorkin over at the Dealbook blog (see article here), discussing how the FDIC is justifying its participation in the Public-Private Investment Program (PPIP). In effect, the FDIC is insuring the PPIP in the name of mitigating systemic risk. While the FDIC is not suppose to guarantee obligations of more than $30 billion, for the PPIP it is not considering total obligations, but contingent liabilities, or what it expects to lose - which conveniently, they project to be nothing. This form of logic essentially allows them to lend an unlimited amount of money. Yet under the PPIP plan, the public-private pool will be financed at a ratio of 6-to-1 public-to-private money, with half of the "1" coming from the private buyer, and the other half coming from the Treasury. With this debt being non-recourse and guaranteed by the government, the risk to the government (i.e., tax payers) would be significant and fully felt. In some ways, it appears that the program will either work wonderfully, or end horribly. Maybe I am missing something, but this sounds like as risky a leveraged bet as I have ever heard. Regrettably, this appears to be just another example of solving a problem caused by taking on too much debt and risk by, you guessed it, taking on too much debt and risk. Why does the term "double down" come to mind? I don't know about you, but I am hoping we hit 21. Otherwise, it may be a long bus ride home.

Vanguard is offering a small cap international ETF which tracks the FTSE Global Small Cap ex-U.S. Index (see Index Universe article). The fund considers both developed and emerging countries. While both "small cap" and "emerging" hint of increased risk, the ETF holds 2,100 different companies, providing broad exposure. The ETF also has a relatively small expense ratio at 0.38%, providing an inexpensive and diversified way to take on some international and emerging growth exposure.

In the wake of a nice bear rally, the SEC is once again discussing the reinstatement of the uptick rule, or some version of it (see Financial Times article). The rule was abolished in July 2007, but now various politicians are writing to SEC chairwoman, Mary Schapiro, asking that the rule be reinstated in order to produce an “unambiguous commitment to promulgate and enforce regulations that put an end to naked short selling”. Of course, naked short selling is already not allowed. While selling on a down-tick may have facilitated naked short selling, reinstating the uptick rule will not by itself rid the market of naked short-sellers. Enforcement of current rules might actually be the place to start. Until the SEC gets serious about investigating delivery failures, naked short selling will continue, regardless of changes in the uptick rule.

In addition politicians, the largest US exchanges have also recently written to the SEC asking that some version of the rule be put back into place, and further suggest that the new rule only allow short selling to be initiated by posting a quote for a short sale order that is priced more than the prevailing national bid. While such a change seems slightly different from the requirement of selling only on a new plus-tick or previous plus-tick (the current price being the same as the last, which was up), the change is significant. A value higher than the bid can still be below the ask. Not only are the prices lower than a plus tick (which is not that difficult to find for highly liquid stocks, even during a sell-off), selling between the bid and ask also makes the transaction less transparent. To make matters worse, the exchanges don't stop here, but also suggest that as an added precaution (guess for who), that a new type of circuit breaker be used that would initiate the rule only when the stock had a precipitous decline - defined as 10 percent. No more killing a stock in one or two days. Now it will take you at least 10 days. Not sure this is much of an improvement.

As for the motivation of the exchanges, you cannot really blame them for being proactive. While it is essential to keep the hedge funds and other drivers of order flow happy, helping to convince individual investors that it is safe to wade back in the waters will also be good for trading and revenue generation. I am sure that it is also hoped that any collaboration will make it more unlikely that the SEC will temporarily change the rules at a later date, selectively deciding what can and cannot be shorted. As for the SEC, they send the message that the days of the wild-west are over, and politicians get to take credit for putting pressure on the regulators and exchanges to look out for the little guy. Yet the changes will be ineffective at best - since naked short selling is not really directly addressed, and will most likely get worse given that shorting on a price higher than the bid is no improvement at all, but simply helps to mask the underlying transaction.

When I began to see the increased focus recently on finally bringing back the uptick rule, my initial thought was that if the rule was so vital, why has it taken this long to get back on the books? Looking at the latest collaborative effort, a little more delay might be in order.

A new proposed product from Macroshares will allow investors to purchase Up and Down ETF shares based on the movement of the S&P / Case-Shiller Composite Index (see WSJ article). Unlike some other similar ETFs, the proposed shares will not be backed by the physical asset, such as you might see with gold ETFs. Therefore, there will not be a specific artificial commodity bull market as the physical asset is bought to cover the demand for new shares (too bad for all those homeowners underwater). Here, the cash is put into government securities to ensure liquidity, creating a kind of zero-sum game as cash is moved from one account to another as housing prices, and the Case-Shiller index, move up and down in price. Obviously, if there is more demand for one type of share, this side of the bet is likely to trade for more than its net asset value, while the other side will trade at a discount. The zero-sum game structure also places a cap on profits since a positive move of 100 percent all but clears out the down shares, causing an automatic liquidation of shares.

While such a vehicle will get some attention given its tie in to the Case-Shiller index, not to mention offering a new and more liquid method for taking on housing exposure, it is likely that only a select set of builders and highly mobile executives on the coast who are looking to hedge their risks will find much use for this specific ETF (see article for past failed housing products). Speculators, of course, will be looking for significant daily liquidity before stepping their toes into the water. Time, and a potential housing recovery (or further bust), is probably needed before people will be encourage to bet with or against housing in this manner.

Large emerging market companies, such as Tata Motors, are taking advantage of the recent global downturn (see Economist article). Such companies are finding they can take advantage of their relative positions in making low-cost production models, due in part to their inexpensive labor. Even without global demand, growth in developing companies is still increasing, even though it has slowed, allowing such companies to stay afloat due to local demand. Finally, there is less international pressure on companies that can make it domestically, since multi-national companies are focusing their investment at home, and becoming more inward looking. Such a development can allow a company making greener technologies, such as Tata, to gain a stronger position, while also allowing new companies more opportunity to get started without high initial competitive pressures.

As a result of both decreasing home values and increasing legal fees, some banks are deciding to not take possession of properties in foreclosure (see New York Times article). In addition to legal fees, homes in foreclosure are seeing increasing maintenance fees, due in part of vandalism and neglect. The problem is that once the bank walks away, the name of the homeowner is still on the title, making them responsible for maintaining the home. Even if the home is to the point of being demolished, the homeowner may be responsible for the cost of demolition and clean-up. It looks like the banks are indeed getting some of their problem loans off the balance sheet, but this may not be the way the Fed and Treasury had in mind.

With leverage no longer propping up demand, many analysts point to signs that we are either currently in, or are approaching a deflationary period, with some expecting this period to last up to 12 to 18 months (see Investment News article). Gary Shilling, who has written a couple of books on the topic of deflation, believes the period of deflation could be much longer, on the order of 5-10 years. In addition to providing a signal of lower consumer spending, and subsequently lower GDP, deflation also increases the impact of debt in real terms for both corporations and consumers. As for investment plays, analysts recommend looking at utilities, agricultural, and high-quality and in-demand consumer staples, in edition to U.S. Treasury bonds and good old fashion cash.

It turns out that Lehman Brothers Holdings has negotiated the return of knickknacks that were sent to Barclays by mistake (see Bloomberg article). The items are being returned so they can be sold, with the proceeds being used to pay creditors, which currently have about $200 billion in unsecured liabilities. Items for possible sale include:

"1,630 green canvas duffle bags with Lehman ribbon, 353 green compact golf umbrellas, 75 Waterford Marquis Treviso crystal clocks, 682 white Lehman coffee mugs, 130 Swiss Army pens, an English beechwood-lined sterling silver box from 1902, 200 Lehman conference pens, 12 pairs of Links of London cufflinks, 24 Screwpull wine openers inscribed “LB,’ 24 Titleist PRO VI golf balls inscribed “LB,” 30 girl Teddy Bears, 18 large, ivory womens’ F&G stretch snap shirts and one Tiffany shooting star."

For just about $62,500,000 per item, you can help eliminate this debt, and help put this bankruptcy behind all of us. And look on the bright side: at least you get an umbrella or coffee mug in return. Let the bidding begin!

There is an interesting commentary by Michael Lewis (see the recent Bloomberg article). In the article, Lewis highlights how the hysteria over AIG is obscuring the real problems at the core of the current crisis, one of which are homeowners defaulting on homes they could not afford, and the government instead throwing money at opaque institutions, the workings of which no one really understands or can challenge. With one line, Lewis captures the problem and current situation:

"The guy who defaulted on mortgages on his six spec houses in the Nevada desert has turned himself into the citizen enraged by the bonuses paid to the AIG employees trying to sort out the mess caused by his defaults."

Here is hoping we can head Lewis's call for getting to the root of the problem, and quickly. It is not that we should turn a blind eye and forgive the guilty and the negligence on Wall Street, but instead should focus more of our energy on the solutions to our problems, beginning with identifying and admitting its root causes. As uncomfortable as it may be, for many of us the problem and solution begins with us.

The gap between the 10-year Treasury note and the 15-year / 30-year fixed-rate mortgages has narrowed, not surprisingly, since the Federal Reserve began actively buying mortgage securities in January (see Bloomberg article). The average rate on a 30-year fixed mortgage fell to 4.96 percent in January, the lowest it has been when considering data that goes back to 1971. Rates were recently at 4.98 percent. With a promise to increase mortgage-backed security purchases by an additional $750 billion, along with as much as $300 billion in Treasury purchases over the next 6 months, rates should continue to be under pressure in the near term. As the Fed continues to support low rates in hopes that consumers will either refinance or make a new home purchase, others are also encouraging consumers to purchase now, but for different reasons. Given the flood of money entering the market, consumers will eventually begin seeing inflationary pressures. Now may be the time to act while both rates and prices are low.

There is an interesting post over at the Business Insider Clusterstock blog regarding the bonus tax bill that recently passed in the House and is now on its way to the Senate. The bill was written mainly in response to the recent AIG bonuses that Congress wrote into the previous 1000+ page bill that no one read (or had time to read). Apparently, some members of Congress have finally gotten around to reading the bill they passed - or at least their constitutes did - causing outrage, both real and opportunistic. The bonus tax would essentially apply a 90% tax rate to bonuses paid at firms which have taken over $5 billion from the Government TARP program. While I cannot really disagree with trying to spend bailout money wisely, attacking the bonuses in this way after the same body passed them just weeks before seems not only wrong, but reactionary. In addition, you have to wonder why Congress decided on the 90 percent number. If the bonuses are unacceptable, why not 100 percent? Is 10 percent OK for poor performance, while 20 percent is an outrage? Furthermore, why are only big companies affected? Is it just the size, or is there some other guiding principal? In case you are interested, the companies that reach the $5 billion bailout threshold and are potentially affected by the bill include some of the usual suspects, along with a few others who want to get out of the lineup as quickly as possible:

• AIG
• Bank of America
• Citigroup
• General Motors
• GMAC Financial Service
• Goldman Sachs
• JPMorgan Chase
• Merrill Lynch
• Morgan Stanley
• PNC Financial Services Group
• US Bancorp
• Wells Fargo
  

While it looks like the bill will fail in the Senate, since it seems to be unconstitutional (kind of a sticking point), it certainly gives you an idea of which companies are likely to be the targets of future hostility against wealth creation. It also gives you an idea why more and more companies and states are looking to pay back TARP money as quick as possible, and reject any future stimulus and TARP-type funding. Investors can certainly expect the companies on this list to have difficulty going forward as their best talent moves to companies not affected by any future legislation impacting companies on the government dole. Their competitors, on-the-the-hand, are going to have a field day snatching up talent that is trying to escape lower paying government wages, along with the restrictions placed on such businesses.

A few weeks ago in a post I made a comparison of how both baseball and the markets had a steroid problem, although with the markets the steroids were in the form of leverage, loose lending standards, poor risk management, complex derivative products, unrealistic valuations, and unethical behavior, among others. Another comparison is unfortunately coming to bear. As with baseball, as long as the markets and the government continue to focus more on the juicers, and less on the solutions for fixing the current problems, both will continue to suffer and fail to reach their objective - reminding us of the opportunity that the markets have for making our lives better. Even though daily 450 foot home runs are a thing of the past, hitting a natural home run is still a thing of beauty, and something to be encouraged, both on the field and in the markets.

This is always an exciting time of the year for me. As a fan and watcher of both baseball and the markets, I find that March is a time for celebration. The markets are often finishing up a nice October-to-April rally (before the sell in May and go away crowd steps in), and the boys of summer are back in Florida and Arizona as spring training gets under way. Yet, as with the last few years, the talk of past and present steroid use has dampened the enthusiasm that surrounds the commencement of a new baseball season. As is often the case, much of this talk gravitates to a discussion of the record books, and whether recently passed milestones should be labeled with an asterisk (*) for those records broken by cheats and users of performance enhancing drugs.

As the A-Rod story recently unfolded, and the talk of steroids in baseball once again took center stage, I began to think about the similarities between both baseball and the stock market over the last 10+ years. Both, as it turns out, were aided by performance enhancers. Like baseball, the markets were on steroids, yet the market steroids were in the form of leverage, loose lending standards, poor risk management, complex derivative products, unrealistic valuations, and unethical behavior, among others. In hindsight, the problems and transgressions seem obvious, just as the increased size of Barry Bonds and Jose Canseco made us wonder why we ignored our lying eyes. Of course, the reason is clear. Watching home runs tower over the center field bleachers is fun, almost as much fun as making money. Lots of money.

Unfortunately, the fallout of a performance enhanced market will not be as painless as the one in baseball. Sure, Mike Greenwell (who finished second to Canseco in the 1988 MVP voting) or Albert Pujols (who finished second to Bonds twice in 2002 and 2003) may feel different, and the integrity of the game has been put into question, but fans can continue to consider Hank Aaron as the true all-time home run leader, regardless of what the record books say. An * next to the record, while satisfying to some fans, is not really necessary. Yet with the markets, it is not that easy, or painless. The market record books have already been corrected, and a decade of financial juicing has been wiped clean. But it is not only the fans of the market who have been duped, and lost fortunes previously made. Even those who were not active participants or watchers of the stock market game have suffered, as both 401k values and home prices have fallen. Unlike baseball, investors don't get to pick and choose whether they accept the new record. The values have been reset, but the remnants remain.

Yet America has always been forward looking, so it is natural to ask: Are there any lessons that baseball can teach the markets? Possibly, although baseball is still getting its own house in order. Nonetheless, the markets can take some cues, and begin the path to redemption. For starters, market participants will need to come to expect lower returns, just as baseball fans are less likely to see 60+ home runs in a season, or 450 foot moon shots. Generating consistently high and above average returns in stocks and home prices is not realistic. Sure, there will be an occasional Roger Maris hitting 61 dingers from time to time, or 30+ percent portfolio gains, but it will happen less frequently (although enjoyed more).

Markets will also need to be more self-aware. Consistent upper deck home runs should be a cause for concern, and not celebration. Likewise, unusual returns, aka Bernard Madoff and various other funds, need to raise a red flag. While this may come in the form of more regulation, this does not have to be the only answer, or the only course of action. Both investors and those inside the industry need to be more skeptical, and less willing to turn a blind eye.

Finally, both baseball and the stock markets (and politicians for that matter), need to focus more on solutions to the problems, and less on finding scapegoats, punishing the guilty, and using the crisis to achieve other goals. This does not mean ignoring the problem, or rewarding the guilty, but focusing only on the cheats does not engender confidence in the game. Even in the darkest hours, offering more positive solutions can go a long way towards restoring the faith in each institution. After all, baseball and capitalism are American traditions. Beating both into the ground is not good for any of us.

Now let's play ball.

As active investors continue to watch their portfolios fall, it is natural for even traditional buy-and-hold investors to not only consider liquidating existing positions, but also think about ways to hedge their portfolio (or even profit from the relentless downward trend). Since the easy short money has probably already been made, some investors and traders are turning to 2X and 3X inverse or short ETFs to juice returns. While such ETFs have been in existence for a while, and articles detailing the uses and pitfalls have surfaced (see two recent 2009 WSJ articles here and here), it is still worth reminding investors how double, triple, and inverse ETFs are better suited for day traders, and are not perfect tracking vehicles past one day. The reason for this is that with the right type of daily moves over an extended period of time, compounding errors can result in inverse ETFs generating overall losses, even when the reference index is down considerably. Tom Lauricella's WSJ article outlines why:

"For example, take a double-leveraged fund with a net asset value of $100. It tracks an index that starts at 100 and that goes up 5% one day and then falls 10% the next day. Over that two-day period, the index falls 5.5% (climbing to 105, and then falling to 94.5). While an investor might expect the fund to fall by twice as much, or 11%, over that two-day period, it actually falls further -- 12%. Here's why: On the first day, doubling the index's 5% gain pushes the fund's NAV to $110. Then, the next day, when the index falls 10%, the fund NAV drops 20%, to $88."

So while a 2X short ETF will double your daily returns when the associated index is down by X, holding periods longer than one day are subject to compounding variations. Unfortunately, such compounding effects may not be the only surprise for long-term investors of index ETFs, or even those with shorter holding periods. Investors need to fully understand what is being tracked. For instance, the popular USO ETF actually trades based on crude oil futures, and not the spot price of crude. As such, if futures prices do not increase as much as the spot price, your ETF may end up gaining less than expected. Rolling from one contract month to the next could also cause gains or losses. If the crude oil futures market is in contango (futures trading for more than spot), rolling over the futures from one month to the next could generate a large loss for the ETF, and lower gains for the investor, as new positions are purchased at a higher price [Note: for a good overview on the issues regarding the USO, see the following seekingalpha article].

As with all ETFs, make sure you look beyond the name, and have some idea how the price is set. The various 2X and 3X inverse ETFs may not be giving you the type of long-term hedge or position you are expecting, and the commodity ETFs may not be following the spot price as anticipated. Finally, always be sure that any index the ETF is following actually has the type of diversification and representation you are looking for. Some industry ETFs may be heavily weighted in just a few companies, or may be focused more on a specific sub-industry.

The Alternative Investment Management Association (AIMA), an international trade body for the hedge fund industry, is reporting that an absolute majority of all assets under management by hedge funds and funds-of-funds are held by institutional investors. In addition, a third of those assets from institutional investors now come from pension funds. While the AIMA has some interest in promoting hedge funds and other alternative investments, the breakdown does highlight how a growing number of institutional investors, including pension funds, university endowments, and foundations that are invested in alternative investments, with the numbers growing each year. While there is certainly reason for individual investors and those on "main street" to be upset with some of what has been happening on Wall Street, using a blanket approach of penalizing all of Wall Street could have unintended consequences for individual pensions and those charitable and cultural activities often sponsored by endowments. Saying that "what is good for wall street is no longer good for main street," to paraphrase some in Washington, could be bad for the average citizen if actions begin to match the rhetoric.

Harvard University, buffered by its huge endowment, has long enjoyed AAA credit. But now, as a result of some past interest rate swaps positions that have went against them, Harvard is now finding itself paying a higher interest rate on recently floated bonds (see Bloomberg article). In fact, Harvard's main rival, Princeton University, was able to obtain better terms recently, as much as 50 bps or more on some debt going out 10 to 30 years. As a result, if Harvard's recent December sale of $1.5 billion in debt had yielded rates similar to what Princeton would have received, the savings for Harvard would have been on the order of $150 million.

It appears that the problem stemmed from the purchase of interest-rate swaps that were being used to protect the school against rates increasing in the future. Unfortunately for Harvard, rates fell, causing Harvard to look for more cash in the bond markets just as credit dried up. At one point the value of the swaps had fallen enough that they were worth a negative $570 million to the endowment. To add insult to injury, the losses required Harvard to post additional collateral, just as the market was falling and its portfolio was losing additional value. The $1.5 billion sale of debt was believed to have been done in part to allow Harvard to get out of the interest rate swap position. Unfortunately, the sale had to be made right at the time when the credit markets were freezing up, resulting in the higher cost for floating the debt. As they say, when markets are crashing, correlations have a tendency to go to one. This is surly something they will no doubt be teaching at Harvard. Liquidity risk is probably another.

Approximately two-thirds of fund managers recently polled by HSBC are overweight in Chinese equities, higher than the 50 percent that were long Chinese equities in Q4 of 2008 (see Asian Investor article). The companies polled were 12 funds with some of the largest assets under management, including (in alphabetical order) AllianceBernstein, Allianz Global Investors, Baring Asset Management, Deutsche Asset Management, Fidelity Investment Management, Franklin Templeton Investments, HSBC Global Asset Management, INVESCO Asset Management, Investec Asset Management, JF Asset Management, Schroders Investment Management, and Societe Generale. Of the funds increasing exposure in Asia, some mention their belief that the stimulus plans of China and Singapore will help support demand and growth in each country. One fund manager also mentioned that the construction and basic materials sectors will serve as a guide for the impact of the Asian fiscal packages, since each will benefit early from planned spending in infrastructure, and should lead to trickle-down effects to consumers. Others are not so sure about the trickle-down effects to Chinese consumers, and also mentioned that while having China rebound will be necessary to help spur global growth, such a rebound may be a few quarters away, at best. Still, most agree that the stage is set given that China appears to have put in place an actual stimulus plan - something the markets in the United States are still questioning domestically.

According to a recent WSJ article, in the wake of the recent Madoff and Stanford scandals, hedge fund investors have been requesting their money back at an increased pace over the last few months. Morgan Stanley analysts are forecasting that assets under management could fall by another 30 percent before the year is over. This follows an already 20 percent decrease at the end of 2008, reducing total hedge fund AUM to below $1 trillion. The withdraws are getting large enough that some funds are now left with only illiquid assets, most of which have to be sold at depressed prices. Increased selling has certainly help pressure the market recently, and will likely continue to do so if the hedge fund redemption forecasts from Morgan Stanley are correct. Having the DJIA fall to 6,000 and the S&P 500 fall to 700 would certainly seem more likely under such intense and systematic selling.

Jim Chanos, the famous short-seller who runs the hedge fund firm Kynikos Associates, was up 25 percent last year betting against equities. Nonetheless, he still found running a successful short fund challenging due to increased client withdraws (see Reuters article). Even with outstanding performance in a down market, investors still withdrew 20 percent of his funds assets. While some withdraws are normal, the percent was probably higher in part due to redemption gates put in place with other funds. After all, if you received margin calls, you have to get the funds from somewhere. As jokingly mentioned by Chanos, "we were like an ATM machine." Fortunately for Chanos and his investors, the Kynikos ATM was being replenished with cash. Given the current market, investors and depositors with some national and regional banks can only hope they are as fortunate.

Recovery rates on leveraged loans (often used to fund leveraged buyouts) have been less than 25 percent, compared to historical average recovery rates greater than 80 percent (see WSJ article).

Source: WSJ article image, Moody's Investor Service data

Given the recession and recent credit problems in the market, increased defaults are to be expected from companies with high debt and falling revenues, yet there appears to be more to the story. As is typically the case when a company defaults, those at the bottom of the debt food-chain, such as those holding senior unsecured bonds and subordinated debt, are the first to lose everything, compared to leveraged loans and senior secured bonds. What is unique in the current market is that a large majority of recent leveraged financing for acquisitions was done with loans, rather than unsecured bonds. As a result, the debt food-chain has contracted, such that the normal buffer of junk bond subordinated debt that is usually in place to absorb the initial losses is smaller than normal, or in some cases non-existent. Recent data from Moody's finds that 60 percent of all issuers in the US that have rated loans, along with over 30 percent with speculative-grade issuers, have a loan-only capital structure. With such a flat structure, losses go straight to the top of the debt food-chain, thereby explaining the lower recovery rates for leveraged loans. This is certainly not good for the large bank lenders of leveraged loans, but may be even worse for the junior lenders that hold subordinated second-lien and mezzanine loans (see Reuters article). A recent Fitch report finds that the recovery rates of such subordinated holdings are expected to remain in the 0 to 10 percent range. It appears we can expect more shakeout in the credit markets, which will continue to put pressure on the banks.

A new study by Mark Kritzman, president and CEO of Windham Capital Management, found that standard index funds - those with their lower fees and expenses (including transaction costs, taxes, management fees, and performance fees) - gave better returns than actively managed mutual funds and hedge funds (see New York Times article).

For his study, which is similar to past studies, Kritzman calculated the average return over a 20-year period, net of all expenses, of three types of investment, including a stock index fund with an annual return of 10 percent, an actively managed mutual fund with an annual return of 13.5 percent, and a hedge fund with an annual return of 19 percent. He used volatility, turnover rates, transaction fees, management fees, and performance fees that were based on industry averages.

His finding pointed to the problem with high expenses. The actively managed mutual fund and hedge fund each had total expenses of more than 3.5 and 9 percentage points a year, respectively. As a result, in order to break even with the index fund net of all expenses, the actively managed fund would have needed to outperform the index fund by 4.3 percentage points a year before expenses. For the hedge funds, it was even worse, with each fund needing to outperform index funds by 10 points a year. While similar studies have been done in the past, the current finding are just yet another reason that the 2-20 hedge fund model may see more resistance going forward. Managers will no doubt be asked more than ever to verify their ability to capture alpha.