This is an embarrassing article to be posted on the CFA website, but then again the fate of this organization is closely tied to the fate of active managers, so I guess I shouldn't be surprised by this content being produced.

This article can easily be rebutted by two points of logic. The first claim of this article is that volatility is a poor measure of risk. The author says 'look, volatility to the upside is good, therefore we've been measuring risk incorrectly'. Then he promotes his fund and suggests they measure risk appropriately by looking at ''economic, environmental, political, regulatory, public opinion, geographic, technology, competition, management, organizational, overhead, pricing power, equipment, raw materials, product distribution, access to capital, and capital structure, to name a few'.

How did we make the jump here? How does the author expect the reader to just conclude that this is the appropriate way to define risk? Are readers expected to be unaware that downside deviation is a better measure of risk than standard deviation?

The second failing of this article is to intertwine the idea that active managers will benefit from this new way of measuring risk. The implicit suggestion is that because we've been measuring risk incorrectly in the past, we've somehow distorted the incentives of active managers and led them to under perform. Poor guys, it was the investors fault all along!

Nope, no matter how you try to spin it, active managers have historically, recently and will in the future under perform. I understand that your careers depend on you not accepting this premise, but you're harming your investors and their families along the way.