Recently, I attended the Eureka Report Around the World of Investing Forum. The overwhelming impression was that global investing is very new to many Australians.
Looking back over the last 40 years, it is clear that, in the next 20 years, successful asset owners and managers are going to listen to Einstein and stop making things too simple.
Statistics rarely tell the story clearly. With trial and error, I found that looking at three dimensions of performance assisted my interpretation.
The world's biggest inaccessible stock market is finally opening to foreigners. Those with strong convictions about the rise of the Chinese consumer may want to take a hard look.
This Resources Kit is a deluge of videos, podcasts, and papers for all sessions of the jam-packed Conference 2014 program so you can "attend" even if you weren't part of the 600 plus audience.
This paper argues that to make choices regarding smart betas we must first assess whether they're robust. Luckily, it concludes, most so-called factors can be ignored.
IPOs of LICs continue. But LICs have unique challenges and complexities that make them a complicated investment decision - which is certainly not the way they are marketed.
Robert Merton, 1997 Nobel Prize winner, has recently penned an article about his views on retirement planning. There are some interesting take aways for Australian practitioners.
Unconstrained debt strategies are flavour of the month, and likely to be very popular amongst investors for several reasons. But where do such funds fit in a portfolio?
The empirical relation between risk and return in emerging equity markets is flat, or even negative - including controlling for exposures to the size, value and momentum effects.
Company fundamentals don't change nearly as much as equity market prices - and therein lies an opportunity for investors with a longer-term view.
To achieve absolute return objectives, many risk management techniques remain relevant but their application and focus need to change.
Demographic understanding is now one of the most important elements in the areas of government and - importantly for investors - future drivers in financial market returns.
Bonds are no longer risk free. It's time to accept the idea and move on - to broaden the traditional idea of fixed-income as a form of risk mitigation and view it also as a risk-and-return proposition.
In recent years, the risk parity approach to asset allocation has been gaining popularity. Evidence supports it but confidence in its efficacy requires a theoretical justification.
A sustained period of lower global growth, rich valuations from traditional assets and an eerie calm before the storm in asset price volatility require a different approach to asset allocation.
Public equity valuations have disconnected from underlying earnings and there is a distorted link between perceived and actual risk.
In managing a risk on/risk off world, investors can maintain or increase exposure to growth assets while experiencing a smoother ride.
The top six stocks in the ASX 300 represent 45% of market cap and 50% of market risk. A 4% TE constrained manager must hold 15%-20% in these six stocks even if they do not like them.
The seismic shift in fixed income after a 30-year bull market for bonds has created significant portfolio construction challenges and opportunities.
The size of the global infrastructure asset universe will expand from $40 trillion earlier this decade to over $110 trillion by 2030, presenting significant opportunities to invest.
Alpha Potential is gaining traction as another important quantitative tool. Its use lies in identifying opportunities for active management of Australian equities amongst other asset classes.
Investing in unconstrained fixed income strategies with more flexibility to change duration and sector exposures can have a positive impact on a portfolio’s overall risk and return profile.
If risk and return are imperfectly linked, there is opportunity to increase average return, without increasing risk - particularly in equity markets where risk is mispriced.
The last decade has seen a distinct disconnect between investment risk and return, versus what we're taught should be the case.
Alpha Potential is gaining traction as a tool to identify opportunities for active management, enhancing the value proposition afforded to active managers.
The last decade has seen a disconnect between investment risk and return vs what we're taught should be the case. What is the long-term relationship? Can it be beaten?
A dynamic risk management approach can protect a portfolio again sequencing risk, providing reliable investment returns over the cycle.
To ensure risk is genuinely well diversified takes a sophisticated forward-looking scenario-analysis process to combine quantitative rigor with qualitative insights of extreme stresses it might face.
This paper explores the thesis that capturing the traditional relationship of fixed income in the total client portfolio will require more untraditional approaches going forward.
This paper explores a different approach to asset allocation and alternative returns sources to reduce the reliance on traditional asset classes and drive returns.
Uncertainty about the timing of future interest rate rises poses challenges to fixed income investors. This paper identifies options available in managing portfolios in such an environment.
Symposium NZ 2014 facilitated debate on the three pillars of portfolio construction – markets, strategies and investing - to help delegates build better quality portfolios. This CPD Quiz is for delegates to complete, to receive Structured CPD Hours.
Everyone knows bond rates are going up - so why would you buy fixed interest? Actually, there are three really good reasons.
PortfolioConstruction Forum Academy Winter Seminar 2014 featured four sessions: Risk, return & relating; Statistics, lies, and investment performance analysis; How safe are safe withdrawal rates in retirement?; and, Communicating and learning with and from clients.
This Resources Kit is a deluge of videos, podcasts, and papers for all sessions of the jam-packed Symposium 2014 program so you can "attend" even if you weren't part of the 200-strong audience.
This paper and presentation argue that starting period equity valuations impact not just medium-term equity returns, but medium-term equity volatility and bond-equity correlations also.
This paper and presentation argue against the use of debt-weighted benchmarks for global bond managers, in favour of a better approach to setting an appropriate benchmark.
Using risk factors in evaluating investments in the portfolio construction process can provide valuable information about the true drivers of performance.
There's some evidence that some managers can add (relatively) consistent value net of costs. Can we (or anyone) identify them?
Are the human and organisational barriers to being better investors insurmountable, or can we learn and improve our decision-making?
Typically, MPT has focused solely on how to invest within classes, not amongst them. But MPT continues to evolve.
This paper and presentation argue that there are real sign-posts that clearly suggest that the US is off its knees and ready to surprise the world on the upside, with significant implications for markets and portfolios.
Graham Rich opened Symposium 2014 in his usual thought-provoking (and entertaining) way, highlighting key issues to consider over the jam-packed, marathon program.
Faced with the prospect of rising yields, some investors are cutting bond allocations. But the bond market can offer compensation against rising rates.
Often, the true dangers reside where investors are most comfortable going and the best opportunities are where investors fear to tread.
It is fine to have positive returns year-in, year-out as an objective or goal. But, absolute returns should never be presented as an expectation, as disappointment is inevitable.
Towers Watson's compendium of insights into global equity investing contains useful insights about issues many portfolio construction practitioners face every day.
Divorcing your debt benchmark and adopting more unconstrained approach to debt investing and offering degrees of freedom to the portfolio manager is the new "core".
The Academy Autumn Seminar 2014 featured four sessions: 10 golden rules for portfolio construction; Reassessing the global debt spectrum; Currency revisited - to hedge or not to hedge; Volatility investing - the next frontier.
When any investment and, in particular, an alternative investment begins to be considered mainstream with attendant big inflows, the end is generally nigh.
The nature of target date funds - encompassing multiple objectives and changing asset allocations over time - raises challenges for performance reporting.
This Resources Kit is a deluge of videos, podcasts, and papers for all 18 sessions of the jam-packed Markets Summit 2014 program - The Great Escape (what will markets be like in the QE runout?) so you can "attend" even if you weren't part of the 500-strong audience.
Think about bonds as an insurance policy for portfolios. With higher yields available, very cheap insurance is even better able to pay for hurdles facing portfolios.
To achieve the Great Escape, central banks must first complete the Great Unwind – the removal of ultra-easy monetary policies. So what is the roadmap for the Great Unwind?
Ultra-low interest rates and QE have offset the deflationary forces of debt deleveraging. The challenge policy makers face is when to withdraw the stimulus to avert inflation.
In a Great Escape world, ignoring the index and actively seeking growth investments regardless of size or weightings is more important than ever.
The US economy made substantial progress in 2013. The economic outlook for 2014 appears promising -and the US equity market can continue to appreciate.
Will QE ruin retirement? Looking back at the risks inflation has presented in the past helps us look forward to the potential consequences.