[MUSIC] Hi there. Securing investment returns in the long run, this is the name of the course. Why should you choose it? Well, basically because after this course you will know everything, well, almost everything, about active versus passive management. What do we mean by that? Well, when you're a active manager, you try to be different, you try to beat the crowd, you try to be ahead of the crowd. When you're passive, you don't seek to be very different, you seek to just replicate an index. We'll see what that means in details. Linked to that, but just somewhat linked to that, is the theme, which we also look into this course, of absolute versus relative performance. We'll see that some managers seeks for absolute returns, ie they want to deliver as much as they can positive returns, irrespective of market conditions. This is an ideal world, right? Can you believe it? You go, and you meet the manager of a fund, and he comes to you, and he says, hey, you know what? Even if the market tumbles by 15 or 20%, I'm going to give you positive returns, I'm going to, maybe plus five or plus 6%, that's kind of appealing isn't it? On the other hand, we also have and we'll see how this is made possible, on the other hand we have those managers who pursue a relative performance strategy, so it's a different ball game, it's a different mandate. Here, the manager is only seeking, but that's already quite [LAUGH] an achievement, only seeks to beat the benchmark. So this is linked to the active versus passive management. Indeed, here, what the manager in the case of relative performance, the manager is trying to beat an index. This can be either an equity index, or a bond index, or a combination of both, if he's rolling a balanced mandate, a balanced fund, combining equities, bonds and cash. The idea is to be ahead of that index. But in this case you should be aware that the manager can bang on his chest if the market is, say, down 30% and he's only down 28%. He would come to you and he says that he says Mr client, I'm very happy you lost 28% of your wealth. And you say, what? And he says yes, but I'm plus two in relative terms, because the market has been down 30%. A link to that, we will have a look also at risk adjusted measures of performance, for that is the key. We're seeing in the next video that there's a common mistake we do is we tend focus on performance as just a number, and if it's high, we're pleased. We'll look into this course, and to this risk adjusted measures of performance that most widely use as the shop ratio, and we see why is it so popular and why you should make use of it when you're comparing funds. Because you should not just look for returns, but you should also keep an eye on how much risk has been taken to deliver that return. Linked to this issue, you will understand with this course why sometimes a fund manager who has won an award of the best performing funds over, say, five years and 10 years, can find himself, this is a cartoon I did for you. He gets drunk in a bar, and he looks quite miserable, and he basically has been fired. And the bartender says, why fired? You won an award and you're fired? What's this? So stay tuned, you'll find out why in this course. You'll also find out why sometimes funds, which are not meant to outperform a benchmark, typically an ETF, we'll see what this means in this course. Well sometimes these passive instruments, which are meant to just be equal as much as they can, to replicate the index, here the Euro Stoxx 50, which represents the 50 largest companies in the Eurozone, well, sometimes [LAUGH] although it's not meant to, the passive instrument can actually outperform the index. And last but not least, and this will be the last spot of these four MOOC's, of these four courses you've had with us, we want to leave you with the latest trends we have identified for you in finance. Among these, the first one we'll talk about sustainable finance, this is something which is very central here at the University of Geneva. We focus on the long run, and this is why we've included this part of sustainable finance and we looked at impact investing. We looked at the more global way of investing by incorporating so-called CSR, corporate social responsibility. Sustainable finance, very important area that you will get some details in this course. Also, one which is probably not as well-known as sustainable finance, we're talking here about neurofinance. And you'll see that, with our colleague here from the University of Geneva, Kierstin Preshov, that this is a hot theme, a hot trend that is currently being developed. What are we dealing with here? Basically, it's the integration of psychology, of emotion into this rational picture that we generally keep, that we generally focus on when we're dealing with investments. When I learned about economics and finance some years ago, [LAUGH] it was all about rational behavior, rational expectations, homo economicus. And the homo economicus became maybe ten, 15 years ago, the homo sapiens. And we started bringing cognitive biases, we started bringing emotions into the picture, and this is what's making the whole thing much more interesting, and probably also, much closer to our reality. And so you'll see here, we've a neurofinance, and my colleague here at he University of Geneva, what we study when we look at this area of finance. And last but not least, also the latest game in town it's FinTech. FinTech is the combination of finance and technology. Very actual, here in Geneva we have an incubator with lots of startups that is linked to the University of Geneva also, where we have all these startups from all over the world developing instruments in this area. What are we dealing with here? Well, one example, and we'll discuss that, is the so-called use of robo-advisors. These automated programs which come and provide customers or investors with a strategic assetile location. We'll see that, in this case, it's pretty easy to come where they, such an outcome. In the case of tactical asset allocation, I still wonder whether you can leave that to the robot, but that's a more personal thing, but anyway, stay tuned. In this course you will find a lot about all these items I just mentioned to you. [MUSIC]
