Institute for Entrepreneurship Welcomes Bepi Pezzulli
On Wednesday, March 29, 2017, the Institute for Entrepreneurship welcomed Bepi Pezzulli, leading expert in risk management, for the lecture “Investment Theory: the New Frontier.” A qualified lawyer in Italy, England & Wales, and in the State of New York, Pezzulli was Head of Legal and Compliance for Italy, Cyprus, Greece, and Turkey at BlackRock, the world’s largest asset manager company. Since 2016 he serves as Chairman of Select Milano, a company that aims to “build a permanent bridge between London and Milan and to relocate in Milan those financial markets” which will necessarily have to move from London in light of Brexit.
Pezzulli presented a new way of conceiving investment theory based on “smart beta.” In Pezzulli’s words, “smart beta strategies aim to improve returns, reduce risks and enhance diversification.” What is new about this way of investing is how diversification happens. Historically, investments would be diversified either asset-wise (i.e. bonds, equity, etc.) or by market allocation (i.e. picking stocks from different markets). Smart beta, instead, uses “factor-investing:” breaking down investments to its building blocks. To better explain the strategy, Pezzulli made a comparison to the food pyramid diagram. The food pyramid normally shows that a balanced nutrition should have of a certain number of meals consisting of vegetables, meat, etc. However, it is possible to break down the pyramid to its basic components: carbohydrates, fat, proteins. Factor investing, Pezzulli said, is the same idea applied to investments.
To conclude the lecture, Pezzulli talked about the possible effects of Brexit both for the UK and the EU, the chances of another referendum for Scottish independence and its outcome, and advocated for Milan replacing London as the main European financial hub. “I am very pleased with how precise and well-thought the contribution of the students were,” Pezzulli said.
Thanks to Marco Fortuna for the contribution.