The 2007 PortfolioConstruction Conference program again challenged delegates' thinking about how they design and build investor portfolios - and it would have been hard to pick a better time to bring together 500 of Australia's leading portfolio construction professionals...
It would have been hard to pick a better time to bring together 500 of Australia's leading portfolio construction professionals. Conference came hard on the heels of the 30 June deadline for post-tax super contributions of up to $1 million and then, during conference week, the US subprime meltdown shaved 6% off global equities...
The fact that fund managers are fallible shouldn't come as a surprise – they're human. New and better models of researching invesmtent skill are emerging all the time...
Our visiting fellow, Bob Veres, summarises the most important things he's taken from the two-day PortfolioConstruction Conference 2007 program, and the follow up he'd be doing if he was a Practitioner delegate...
Andrew identifies ways we should be framing our thinking about longevity and portfolio construction, and some of the possible solutions...
This session explains how companies that have a sustainable competitive edge, having created this by owning or operating assets that are difficult to replicate, can deliver superior returns over time...
This session addresses addresses a specialist investment approach looking to profit from one of the mega trends affecting global equity markets – global agribusiness...
In this session, Dr Sethi overviews the development of India from an IT outsourcing destination to its emergence as the world's R&D and design hub – the ultimate "rent-a-brain" supermart...
This session examines the historical importance of including dividend-paying and dividend-growing companies in global portfolios and the impact on overall returns...
This session explores the shift to absolute return focused funds, the merger of long-only hedge funds with 130/30 funds and the acceptance of longer-term, less liquid strategies as a way of delivering alpha...
This session addresses the question of TAA value add from a practical, experiential viewpoint and outlines a TAA approach and process which has delivered superior returns on a consistent basis...
As markets have developed, there are increasing opportunities for global investment in infrastructure, via the listed markets. This session explores the opportunities for investors in global infrastructure in today's market...
There is a global trend towards concentrated portfolios. This session explores whether concentrated portfolios are appropriate for client portfolios...
This session examines the benefits of concentrated portfolio management and the value that an absolute return focus adds to this strategy...
This session examines the key assessments to consider when developing an asset allocation to unlisted property...
This session explores the key characteristics of capital protected products to highlight the place these types of products have in most investors' portfolios....
This session examines the current state of play in the Australian securities market. We look at the prospects for total returns from property securities in the future...
The ability for global and Aussie markets to bounce back following prolonged periods of relatively poor returns is testimony to one of the most enduring, fundamental characteristics of bond returns – that is, bonds are naturally mean reverting assets...
This session examines the emergence of new tools that allow managers to take advantage of new segments of the fixed income market and shows how managers with the right skills are equipped to uncover the dynamic opportunities of this once staid asset class...
When it comes to active management, two heads are better than one, and three heads are even better! Harnessing this insight to generate excess returns is a complex portfolio construction problem...
This session discusses how investors can potentially achieve more consistent and higher long-term returns by investing in more - not less - stocks...
This session explores the alternative investments universe – how alternative investments inter-relate with traditional markets, and their role in portfolio construction...
This session explores a recent study undertaken by State Street Global Advisers looking at the value added by specialist managers operating in the Australian institutional market across the Australian equities, international equities and listed property trusts sectors...
Operating leases over transport assets are one of the best kept secrets in the alternative asset space...
This session explodes 10 myths, or common misconceptions, regarding the construction of international equity portfolios...
This session looks at the benefits of including both listed and unlisted infrastructure assets in a client’s portfolio and how to determine the best combination of these assets to achieve an optimal portfolio structure...
This session examines new and interesting ways of sourcing multi-alpha from traditional assets...
Why bonds? This session explores major structural changes in fixed interest markets and how these relate to contemporary portfolio construction issues...
Allocations to alternatives and private equity in particular are steadily increasing around the world. This session focuses on the benefits of private equity investments and the value proposition offered by experienced private equity managers...
Audio and Powerpoints from the 2006 PortfolioConstruction Conference Due Diligence Forum sessions...
A large number of high conviction or "concentrated" equity funds have been released in recent years, all promising higher returns than traditional funds by focusing on the strongest stock selection ideas of a manager. This paper examines the evolution of high conviction funds, looking at why they have been developed, their risk/return characteristics and the broader implications for portfolio management...
Short of time? For each Journal issue, we highlight papers we feel you shouldn't miss - this is one. It investigates whether resources is a bubble ready to burst or whether they still represent an attractive investment proposition, and how best to incorporate resources into a portfolio...
This paper discusses balancing liquidity, income, valuation, risk and diversification objectives in building property portfolios. It examines the key questions currently confronting Australian investors – How should investors gain exposure to offshore assets? Which markets provide appropriate income levels? How can direct property be included in a portfolio without sacrificing liquidity? What are the current valuation conditions in markets? – and demonstrates the characteristics of an optimal property portfolio.
Hybrids have delivered uncorrelated high returns combined with low volatility over the past five years. This paper explores why, despite some changes in the return equation, their reduced risk and still healthy returns make hybrids one of the most compelling income sub-sectors....
In a small, concentrated market like Australian equities, fund capacity is an important consideration for investors. This paper discusses why the most important factor in determining capacity is an Australian equity manager's style and the best representation of style is actual performance and trading history...
Short of time? This is one Journal paper you shouldn't miss. It examines why and how India should be a key component of investors’ exposure to emerging markets, arguing that investors should not limit themselves to just one leg of the BRIC/emerging markets story...
A market-weighted approach has been the traditional way of constructing international equity portfolios – often because this is the type of benchmark index against which fund managers are measured. But is this the best approach? Building market cap-weighted portfolios is not the mantra of all active, large cap equity managers. This paper examines an alternative construct for an international equities portfolio that encapsulates potentially greater investment returns and a better way of assessing portfolio performance.
In theory, funds management is a highly scaleable business where profit growth results from increased funds under management (FUM) while product quality (investment returns) remains unaffected – alpha creation is purely a function of portfolio construction through time and the size of the portfolio is irrelevant. However, there is reason to believe the product quality of a funds management business is not independent of FUM. The difference between the theoretical world and the real world relates to transaction costs. This paper describes transaction costs, and considers factors likely to influence the level of these costs, before turning to the impact of size and investment style on excess returns.
Global economic growth in Asia has produced unprecedented demand for commodities – and opportunity for investors. This paper examines the benefits of investing in commodities and discusses how an active approach to commodity investing may mitigate downside risk, and create alpha opportunities that are unavailable to passive commodity index investors.
The search for global alpha should include developing economies on several levels. Recently, the role of emerging markets in the global food chain for the manufacturing and distribution of products and services has significantly increased. Investors monitoring this shift can find valuable information that could potentially drive stock prices of companies in different parts of the chain. This information may not be visible when viewed discretely from an individual country or even continent standpoint and provides global investors with a distinct advantage.
This paper examines traditional approaches to buying international equities, highlighting some of the problems with capitalisation-weighted benchmarks, and suggesting that replicating a global index may no longer be the optimal solution for those investors with longer-term investment horizons. It looks at some of the new strategies available to capture beta and illustrates how diversification can be used to manage risk for investors in a less constrained portfolio.
Traditionally, investors have gained exposure to listed property via the Australian listed property trust market. However, the changing Australian property investment environment, combined with greater investment in global property assets, has resulted in the emergence of global property securities as a credible investment choice. Where and how does global listed property fit in a diversified portfolio?
Over each of the past five years, the returns on a diversified international bond portfolio fully hedged back into Australian dollars have well exceeded the return realised on a typical Australian bond portfolio. As a result, many fixed interest clients are looking to increase allocations to international bonds. This paper examines some of the reasons why international bond portfolios have outperformed their Australian counterparts and asks whether this is likely to continue.
Short of time? Here's another Journal paper you shouldn't miss. It examines key infrastructure investment considerations, the risks of investing in infrastructure, valuations, and infrastructure's place and role in a targeted return portfolio...
The global equity benchmark excludes many opportunities as the industrial advantage shifts to the so-called emerging economies. This paper challenges the conventional belief that history is the best guide to determine the optimal composition of the international equities component of a portfolio. It examines why it makes sense to structure an investment portfolio that emphasises global themes and relationships, as opposed to geographic regions. It looks at how a thematic approach to investing identifies the major secular, cyclical and structural influences on the world’s stock markets, and how consistency, risk control and diversification are managed.
Has the role of traditional fixed interest managers changed? This paper explores why it remains critical to have fixed interest in portfolios, both as a tool to lock in income and also as a defensive play. It asks "How do fixed interest managers keep pace with investor demand for greater returns, in a world where spreads are tight even in what are considered more risky securities?" Finally, it argues that with the prospect of rising inflation, declining GDP and a new Fed Chairman throwing uncertainty into the mix, perhaps locking in CPI + 4% isn’t a bad thing!