(Harvest) Mispricing risks can be taken advantage of over the short-run, but are unlikely to last and will diminish as more investors invest in these opportunities. Priced sources of risk are perhaps the most critical focus for portfolio managers because they represent both the best opportunities as well as hidden risks. These risk premiums can include growth, inflation, and liquidity as well as a host of other factors that may be time varying. Portfolios can be tilted to either take advantage or eliminate these sources of risk once they are identified.
Get To Know The Types Of Diversification Because It Matters For Long-term Performance
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