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G'day
SAA vs DAA, passive vs active, quant vs qual - they're
each a
major debate of investing that stirs up
an almost religious fervour in some of their proponents. This week, Dominic
McCormick offers what is in my view
an
all too rare balanced summary of the pros and cons of passive vs active investing. Dr Robert Gay (past senior economist for the Board of
Governors of the US Federal Reserve) analyses the Fed's portfolio
holdings
to show how the Fed will exit QE. We feature an excellent white
paper from GMO
on the shortcomings of traditional target date funds, and
how better to invest for retirement (and you do not have to be a
fund manager to do it, the tools are already available to practitioners
e.g. the
farrelly's
offering available on PortfolioConstruction Forum). For
a quick 5-minute overview of unconstrained debt
investing, see my recent interview with PIMCO's Lisa Kim about
divorcing
your debt benchmark. And in a humorous treatment of a serious topic, BlackRock Investment Institute puts
emerging markets on trial, asking their
EM experts to defend their
asset class against three charges (check out Figure 7 and 8 in
particular on EM equity market valuations). Dovetailing in nicely is |
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another very highly rated session
from the recent Markets Summit 2014 - Kathryn Koch explaining
why going
forward, EM performance will depend on individual merit.
All the best for a great weekend's learning and week ahead -
Graham
P.S. Fodder will be back in a few weeks, after the upcoming Easter/ANZAC
holiday period (a marvellous two-week opportunity to
catch up on back issues of
Forum Fodder!)
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LATEST...
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Active versus passive
The active versus passive debate was recently given a boost when Warren
Buffet suggested in his annual letter that most investors are better off
investing passively.
Dominic McCormick, Select Asset Management | 1
comment | | Opinion
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The Fed's exit strategy
The Fed’s published policy on how it will exit QE is fairly old.
Overall, though, there is not a huge overhang of securities that the Fed
needs to sell to exit.
Dr Robert Gay, Fenwick Advisers | Opinion
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Investing for retirement: the defined contribution challenge
Target date funds are becoming the workhorse for DC plans but there are
problems with the approach. This paper offers a portfolio construction
framework to overcome them.
Ben Inker & Martin Tarlie, GMO | White
paper
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Divorcing your debt benchmark
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".
Lisa Kim, PIMCO
| Opinion
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Emerging markets on trial
Against a backdrop of currency slides, yield spikes and chronic equity
underperformance, we invited our EM experts to defend their asset class
against three charges.
BlackRock
Investment Institute | White
Paper
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Quantitative squeezing - differentiation in EM Investing
Emerging Markets were a focal point in 2013, repricing as US stimulus,
commodity prices and China's boom subsided. In future, EM performance
will depend on individual merit.
Kathryn Koch, Goldman Sachs Asset Management | Resources
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Rated "very good" by Markets Summit 2014 program
delegates
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RECENTLY...
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The changing face of global risk
Economic, financial, and geopolitical risks are shifting. A year or two
ago, six risks stood at center stage. These have now reduced. But six
others have been growing.
Nouriel Roubini, Roubini Global Economics | Opinion
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Rise of the machines - how will the EMs keep pace?
In theory, recent currency devaluations should make EM countries more
competitive. But they're also facing a technological jump that they may
not be able to keep up with.
Hon. Dr Pippa Malmgren, Principalis Asset Management | Opinion
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The euthanasia of pensioners in Peoria
So the US budget deficit is contracting because government consumption
is falling? It is really just an accounting illusion. Financial
repression is still the order of the day.
Charles Gave, GaveKal | Opinion
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Age banding - a model for planning retirement income needs
In recent months, we've reviewed one school of research on funding
retirement income, the sustainable withdrawal rate approach. This paper
takes a very different approach.
Angela Ashton, PortfolioConstruction Forum
| 1
comment | Research
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The changing face of correlation?
The challenge for investors over the past several years is that
diversification did not work as expected. The dynamic nature of
correlation must be factored into portfolio modeling.
Dan Farley & al, State Street Global Advisors
| 1
comment
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Paper
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The sweet spot of the global economy
There is no doubt that some countries are better placed than others in
The Great Escape. In fact, Australia and NZ have the chance to be rock
star economies of the 21st century
Oliver Hartwich, The New Zealand Initiative | Resources
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Rated "very good" by Markets Summit 2014 program
delegates
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PLUS...
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Markets Summit
2014 - The Great Escape - Resources Kit online
The most successful
Markets
Summit program yet (97% of delegates rating it good (42%) or excellent
(55%)), the 2014 program featured a stellar line-up of international and
local geopolitical specialists, economists, market/asset class experts,
and investment strategists. Each offered a high conviction idea
regarding the impact of Unconventional Monetary Policy on the
medium-term outlook for the global economy, key market or asset class -
and, of course, the implications for portfolios.
Access a baker's dozen of expert, high conviction insights to consider
applying when building portfolios.
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Mark Your
Diary: PortfolioConstruction
Forum Conference (19-21 Aug)
Since 2002, PortfolioConstruction Forum Conference has gained a
reputation as THE investment conference of the year. Presented in Sydney
each August, it is our flagship program - a jam-packed, marathon
three-day, 25-hour program featuring 40 intensive, objective,
interactive sessions and more than 50 carefully selected local and
international portfolio construction experts. It is a companion program
to the annual Markets Summit held in Sydney each February.
Preview the theme "Reconnecting the three Rs - Risk & Return (&
Relating)"
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Keep up to
date - follow us @PortfolioForum
There's no need to wait until
our weekly Forum Fodder email to know what's new with PortfolioConstruction Forum.
Just follow us on Twitter to hear as soon
as we release new articles on
PortfolioConstruction.com.au and
registration opens for our live programs.
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