Hany Shawky and David Smith: Gurus of Index Investing

 

Fluctuating stock markets and the deep-rooted financial crisis have kept UAlbany's School of Business professors Hany Shawky and David Smith even busier these days. Besides teaching and conducting research, both are also keeping track of the latest developments in the world of finance. Still, they continue to add to their distinguished reputations in the field, most recently with prestigious appointments to the Index Business Association's Academic Advisory Board.

"The School of Business is immensely proud of Professors Shawky and Smith. They join an elite group of finance professors in advising the IBA," said Dean Donald Siegel. "This is an excellent example of how leading-edge academic research in the School of Business is valued by industry."

The recently-established IBA -- founded by Albert Neubert -- engages in advocacy, research and education activities to promote best practices and standards in the development and distribution of indexes, index products and strategies, and to enhance the responsible use of indexes, index products and strategies by institutional and retail investors.

Financial market indexes are gaining in popularity and number -- the Dow Jones Industrial Average used to be one of the few indexes in existence, though the number has swelled to thousands of indexes today. Given the increased importance of the indexing business, IBA was created to serve the interests of index designers, index users, index product developers, and scholars doing work in the areas of investment performance measurement and benchmarking.

As board members, Shawky and Smith suggest programming themes and speakers for the IBA's annual conference, the Super Bowl of Indexing, the largest single institutional investment conference in the world. The most recent conference, which attracted about 700 delegates worldwide last December, featured presentations by Professors Robert Shiller, Kenneth French, and Nobel laureate Harry Markowitz. General Barry McCaffrey provided a keynote speech outlining the world's trouble spots and their likely future impact on financial markets.

"Being asked to join on the Academic Advisory Board is quite an honor. Our fellow board members include numerous chaired professors with international reputations," said Smith, director of UAlbany's Center for Institutional Investment Management (CIIM). "It is particularly gratifying to be asked to join when the organization is in its formative stage."

The CIIM has also been commissioned by the IBA to produce ongoing work that will constitute a record of the success of portfolio managers seeking to beat the performance of benchmark indexes. The work, "Benchmark-Adjusted Performance of U.S. Equity Mutual Funds" -- which will appear on CIIM's Web site in March -- will compliment CIIM's mission of furthering knowledge and understanding of the role, responsibilities and activities of money managers.

"It is a big deal to us because we believe in the mission of the IBA. We consistently follow developments in the academic literature on the efficacy of indexing as an investment strategy," said Shawky. "We hold our fellow board members and Al Neubert in high esteem. Increasingly, the organization is likely to be highly visible in the investment industry."

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