Ultimate Position Sizing Guide Part 1

Our data says that up to 600 basis points is on the table from better position sizing process. Read this paper to find out how and get insights from our 20-year experience working with portfolio managers.

‍

What You’ll Learn in Part I:

‍

• The Real Impact of Sizing
  See how proper position sizing can make or break your performance—even with great stock picks.
  ‍
• Why Most PMs Underestimate the Importance of Sizing
  Understand why ad hoc sizing still dominates and why it’s costing firms serious returns.
  ‍
• From Gut Feel to a Solid Framework
  Explore the industry-accepted sizing frameworks—from equal weighting to Kelly and optimization—and pros and cons of each.
  ‍
• The Case for Structure
  Learn how introducing discipline in sizing translates into measurable alpha.
  ‍
• Alpha Theory’s Unique Perspective
  Dive into real-world data across dozens of hedge funds and how structure correlates with outperformance.

‍

What’s next in our series

‍

Part 2: The Value Drivers of Process & Getting Over the Obstacles:

‍Building on the foundation from Part 1, we’ll quantify the impact of structured position sizing, explore real-world data on its effectiveness, and outline best practices for implementing a systematic approach to improve portfolio performance.

‍

Part 3: Fundamental Optimization & Position Sizing Best Practices:

Learn how to transition from intuition-based sizing to a structured, repeatable process using Fundamental Optimization, ensuring alignment between research and portfolio construction.

‍