Analyzing Market Anomalies for Active Equity Management

As an equity portfolio manager for a large investment firm, you have been asked to analyze the viability of exploiting market anomalies in your active equity investment strategy. Recent research indicates a resurgence of interest in certain behavioral finance concepts that suggest investors may exhibit biases that lead to predictable mispricing in the stock market.

Specifically, consider the following market anomalies: the January Effect, momentum investing, and the value premium. Discuss how these anomalies provide opportunities for active equity managers and outline the potential challenges and risks associated with exploiting these anomalies in developing an active equity portfolio. You should include real-world examples to support your analysis.