Modern portfolio theory has dominated the academic investment landscape for a half century. One hallmark of MPT and other key investment theory paradigms is an increased focus on elements of the economic system proximate to security selection and portfolio construction (i.e. securities, asset classes, investors) rather than the real economy.
Meanwhile, the increasing importance of the private sector relative to the public sector in the real economy has increased scrutiny of private sector behavior and economic activity. This has led to the rise of a responsible investing movement.2 However, a significant focus of that scrutiny, though certainly not all, is explicitly or implicitly normative (i.e. a private sector entity “should” act in a certain manner) and pays minimal attention to portfolio and investment theory.
The IRRC Institute Research Award seeks to encourage thought leadership that integrates analysis of private sector behavior with investment theory. Because the judges seek to allow for a broad interpretation of this research goal, the award does not require specific areas such as specific asset classes or a requirement to study specific real economy issues.
2Responsible investment, for this purpose, includes various rubrics across both the financial and real economies, such as socially responsible investing, corporate social responsibility and sustainability.