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 Friday 30 January 2015

The independent professional development service for investment portfolio construction practitioners


In today's multi-polar world, geopolitics has returned to the fore - but which geopolitical issues should be taken account of in portfolios, and how? This week's Fodder features a recent BCA Research paper that explains clearly how to take account of geopolitical issues within your investment strategy (you can read the full paper, then sit the online CE quiz to earn 1.25 CE points).

Next up is Michael Edesess (you may recall his critique last year of DFA's research paper on a five factor asset pricing model, as it was one of the most read in Fodder's history). This week, he gives a beautifully simple summary of a recent paper showing that the practice of evaluating manager performance against an index benchmark could be distorting asset prices across the whole market.

Bill Priest then argues that the bad press around share repurchases is misleading, a "good repurchases" are just dividends by another name. Given Bill's been investing longer than most of us have been alive, his views are always worth absorbing.

Dr Bob Gay carries on where he left off last week, this time explaining why the FOMC participants are wrong in their inflation expectations. Bob worked for the Fed under Paul Volker, arguably the most successful Fed Chair ever so like Bill, his views are incredibly well informed.

Finally, we feature a short video Insight from Tim Griffen on why the Japanese equity market is at the start of a secular upswing. On that note - the re-emergence of Japan is just one of the cyclical, structural and secular themes that will be discussed at our upcoming Markets Summit on 17 Feb 2015.
All the best for some great weekend learning! - Graham

P.S. Check out the lineup of Markets Summit 2015 presentation topics below!


A primer on geopolitics and investing
Does geopolitics have investment implications? In short - yes - and this paper provides a clear understanding of both geopolitics and its clear link to investment markets.
Angela Ashton, PortfolioConstruction Forum
|  1.25CPD  |  

The price all investors pay for benchmarking
Could measuring and evaluating manager performance by comparing it to a market index be distorting prices across the whole market? That is the conclusion of a recent paper.
Michael Edesess, Fair Advisors

Dividends by another name
Share repurchases have recently been receiving a lot of press. We see dividends and share repurchases as equal ways of returning excess free cash flow to business owners.
Bill Priest, Epoch Investment Partners

The alleged missing link - wage inflation
The consensus of FOMC participants expects core inflation to revert toward the 2% target over the next two years. I think they will be wrong.
By Dr Robert Gay, Fenwick Advisers

Land of the (re)rising Sun
Japan has a history of changing dramatically, often when least expected. Under Abe's policies and reforms, Japan is well-positioned to reemerge as a global investment force.
Tim Griffen, Lazard Asset Management

Member comments
Academy Spring Seminar - Key takeout

Bubbles by definition appear when most participants concur with a particular view. Therefore whilst there remains a wide dispersion of views it would seem unlikely that a bubble could inflate. For those who correctly predict a bubble it is likely that you will look wrong for a period depending on how long it takes for others to come to your view. Nothing wrong with that, but it can be a lonely place for a while.
David Graham, McPhail HLG Financial Planning
More about Academy

China A shares emerging from the bear?
replying to James Waggett...remember there is a big difference between AGF and any China index. Comment

Risk transfer vs risk retention
This excellent analysis really set me thinking. If we just talk about financial longevity risk it’s easy to overlook the other side of the longevity equation... Comment


Risk transfer vs risk retention
The real distinction in retirement income philosophies is not about which are "safe" and which are not. It is whether risk is transferred or retained (and if retained, managed).
Michael Kitces, Pinnacle Advisory Group
1 comment Opinion

Undiscovered Fund: Active Au equities fund with a growth bias
An actively managed portfolio with a growth bias, positioned towards companies whose earnings growth potential is greater than the market's expectations.
Zenith Investment Partners

Australia, the next shoe to drop
Australia still looks like one of the holdout anomalies in global markets where the adjustment from a decade of mispriced assets has yet to fully play out. 
By Will Denyer et al, GaveKal

Deja vu deleveraging
As long as policymakers can stay on course and avoid the policy mistakes of the late 1990s, the oil price collapse could prove more therapeutic than destructive.
By Dr Robert Gay, Fenwick Advisers

The Swiss release the Kraken
In an era when central bankers are supposed to be more open, collaborative, and communicative, why did the SNB decide to turn on a dime and shock the markets?
By John Mauldin, Mauldin Economics

Member comments
Academy Spring Seminar - Key takeout

There is more to the debt asset class than meets the eye. It is important to not see debt as the "safe" component of client portfolios - and it can replace or compliment the equity composure of the portfolio when considering assets or strategies not as equity or debt...  but as forms of return with risk characteristics.
Fergus Hardingham, FM Financial Solutions
More about Academy

Markets Summit (17 February 2015) - Cyclical? Structural? Secular?
What's really driving the outlook for markets?

Featuring a stellar lineup of international and local experts presenting their best ideas on the key cyclical, structural and secular issues that are driving the medium-term outlook for markets - and, of course, the implications for portfolios. Presentations include;
EM: Cyclically challenged, structurally adjusting, secularly promising
- The Euro and the Eurozone will come under increasing strain
- Bond markets lock up and lock out returns
- The US stands out in a low growth world
- EM in a rising $ world: Vulnerabilities but no systemic risk
- India’s transformation: a compelling fixed income opportunity
- It's time to think yes Japan, not ex Japan
- Greenspan 2.0: the Bernanke Boom will bust
- Break-up of the eurozone is inevitable
- Babies - the key secular trend that will drive portfolio returns
- Navigating the fourth D is essential for performance
- In a race without a hare, the US holds the cards in 2015
- The great US equity bull market is finished
- Limbo lower - real rates are at a structurally lower level
- Oil price moves are a cyclical risk, adding volatility to markets
- Australia's New Neutral: Low interest rates for even longer

17 FEB 2015 | SYDNEY | 10+ CPD | A$575+GST | Register now


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