Persistence of Market Anomalies in Equity Investing

Medium Active Equity Investing Market Anomalies

During a recent investment seminar, a portfolio manager discussed various market anomalies that can present opportunities for active equity investors. Among these anomalies, the momentum effect, value effect, and size effect were highlighted. The portfolio manager emphasized how these anomalies challenge the efficient market hypothesis and can be leveraged in equity portfolio management.

Considering the discussion on market anomalies, which of the following statements is true regarding the persistence of these anomalies in equity markets?

The size effect is consistently evident across all market conditions, providing reliable excess returns.

The momentum effect has shown persistence in various markets, suggesting that past stock performance can predict future returns.

The value effect has diminished over time, indicating that value strategies no longer outperform growth strategies.

Hint

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