I have been paddling for quite some time now, but have only recently found myself totally immersed in the whitewater world. I resisted the sport from a young age until I was about 14. Last year, my dad told me about this place near Lexington, Virginia, called Goshen Pass. There are two different runs on Goshen, both pretty short, the upper and the lower. Goshen is on the Maury River and the upper section hosts class III-IV whitewater. I took one look, said “No thanks.” and proceeded to run laps on the lower section.In March, I heard tales of a race that was going to happen at the Pass, and I was interested in taking pictures. I hiked into the gorge from the side of the road with my camera and tripod and my dad threw our boats on top of the car, just in case we wanted to paddle a little after the race was over (yeah, right). Except that’s exactly what happened.I was peer pressured into running the upper section of Goshen post-race by one of my good friends who said something along the lines of “What can go wrong? You can totally do this, no problem!”. Of course, that meant I swam my first lap, but it also meant I was determined to return for more. Since last March, Goshen has been a key destination for me whenever it has been running, and I was stoked to race it this year.The annual Goshen Pass Race has been going on for the past eight years, beginning in 2007 when a group of local boaters were trash-talking each other about who could paddle the lap the fastest.“It was just a bunch of friends who decided we would get together on a certain day and see who could paddle to Indian Pool the fastest,” said Gordon Dalton, a Pyranha Kayaks team member and organizer of the race this year, “Since then it has grown. We have had between 30-50 racers over the past few years, depending on the level, the weather, and whatever else is going on that day.”I raced for the first time this year, with 30 boaters, including the class of three women. We put in at the swinging bridge, floating down all together to the start point. I heard the countdown from 10 seconds being shouted across the river and then we all took off, paddling down the Pass. All of my nerves vanished as I concentrated on staying on my lines – my goal did not lie in placing highly, but instead I was simply focused on maintaining speed and good lines. The previous day I had been out to Goshen and had completed two practice laps, my second lap had involved lots of banging on rocks through a rapid named Devil’s Kitchen as I flipped three times in the duration of the relatively short, but technical, rock garden. However, during the race I had the smoothest lines through both Devil’s Kitchen and the boof at Corner Rapid I had ever experienced.I finished 21st overall, second in women’s, 1st as a junior woman. Paddling up to the finish line, I was all smiles, happy with my lines and excited for another lap. The rest of the racers and crew cheered as people finished and the sense of community was prominent.“This race is special as a real down-home, grassroots gathering of the Virginia whitewater community,” Dalton said, “There is no racer fee, no snazzy T-shirts, and no ego or drama. Just folks getting together to celebrate Spring and this beautiful place we get to play within.”There are a few sponsors, including Pyranha Kayaks, Appomattox River Company, and Werner Paddles who donate prizes for the racers, and there are homemade trophies for First Place, Second Place, and the Carnage Award. But the coolest part of the race is how low-key the entire thing is. The whole community is really supportive and everyone is cheering on each other, making the day one I was happy to be a part of. I am excited for the rest of this season on Goshen and am already looking forward to next year’s annual race. More information about the race and final times can be found here and the slideshow of photos from Gordon Dalton and Emily Powell are available here.
Alfred Slager, professor of pension fund management at TiasNimbas Business School at Tilburg University in the Netherlands, has set out an eight-point checklist for institutional investors considering a factor-based approach to portfolio management or investments in smart beta.Factor investing takes into account risks that stretch across different asset classes – from economic growth and political uncertainty to credit, duration, size, value, volatility and illiquidity – to achieve more robust portfolio diversification and to refine exposure to factors with desirable risk/return characteristics.Slager – presenting the findings of a study into European pension funds’ awareness of and approaches to factor investing at a 31 January seminar organised for clients by Robeco in Rotterdam – laid out the advantages in terms of better diversification, improved benchmarking of active managers and more cost-effective exploitation of systematic market risks, but emphasised the governance challenges that face investors trying to adopt these new methods.“There is a lot of interest in these processes but also a lot of uncertainty about how to embed them into the portfolio,” he told the delegates, which included many leading Dutch and Belgian pension funds. “If factor investing is so compelling, how come every pension fund isn’t doing it? What are the barriers and challenges?” Slager reported three basic ways in which investors were implementing some of the ideas behind factor investing.The first approach involves leaving the portfolio as it is, with the fund using the additional insights about exposures and diversification.The second identifies existing factors tilts and corrects them to some extent to introduce a more desirable mix of factors.The third approach aims to create a portfolio that is unconstrained and fully factor-optimised.“Today, pensions funds that have taken any steps at all have usually taken steps one and two, and dream about step three,” he said.But Slager’s survey of the latest pension fund annual reports revealed almost no mention of factors or factor investing, suggesting that even many of those investors pursuing these ideas do so without fully considering the theoretical framework, or struggle to communicate that framework to trustees and members.“Trustees have pointed out to me that the level of abstraction we are dealing with is one hurdle,” explained Slager. “It is difficult enough trying to describe what equities and bonds do in their portfolio; if we move up a level and begin to describe term risk, volatility risk and so on, that is a considerable challenge under a governance structure that requires much greater transparency and communication that it has in the past.”This is important, Slager added, because investors need to establish their beliefs about whether individual factor risks are rewarded over time, how long it can take for those risks to be rewarded, how well the resulting risk/return characteristics fit with their own particular objectives and constraints, and how best to benchmark performance.Many of these points are still the subject of academic debate, and can be significantly affected by real-world investing constraints such as transaction costs or restrictions on short selling.“The fact many of these factors appear to have statistical persistence over time is all very well, but, to communicate properly with clients, we also have to know what realistic expectations we can have about these factors, how reliable they are and, most importantly, whether we have a persuasive economic story that makes sense for them,” Slager said.Even once these investment beliefs are agreed and communicated to members, factor investing introduces a range of potentially complex active investment decisions, and investors need to consider where in their governance structure those decisions should be taken and monitored.“We therefore tried to condense our findings from discussing these issues with pension funds into a checklist that would be helpful once an investor has decided to use factors in its model,” said Slager.His checklist had eight points:Treat factor investing as an investment belief and an investment paradigm, rather than merely a techniqueEducate stakeholders to a full understanding of factor investingEstablish common definitions for the terminology used with trustees and membersFocus on appropriate benchmark constructionRegularly review the economic rationale for chosen factorsBe consistent in implementationRecognise that these are active choices that require an active stanceDecide early on how static or dynamic allocations to factors will be