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 Friday 04 December 2015

Independent continuing education for investment portfolio construction practitioners

On markets and managers
This week in Fodder, Mohamed El-Erian looks at the implications of the impending monetary policy divergence in the US and Europe while Faculty member, Dr Woody Brock, challenges the consensus view that the global growth slowdown is due to China slowing, and then looks at what's really going on. Faculty member, Michael Furey, tests whether fund managers taking more non-market risk really do produce higher alpha (yes and no). And, Bob Huebscher summarises the findings of a new paper challenging factor-based investing over asset allocation by asset class, before Ashley O'Connor argues the use of alternatives in portfolios.
All the best for another great weekend's learning - Graham
. Registration will open next week for Markets Summit (16 Feb) and Finology Summit (17 Feb).


Does higher non-market risk produce higher alpha? The possible introduction of the Furey Ratio
There's a widely held belief that in order to create alpha, a fund manager needs to make meaningful bets away from the market. But is this the reality? Does greater non-market risk actually produce higher alpha?
Michael Furey,
Delta Research & Advisory 0.50 CE Research

The great policy divergence
As the Fed normalises its monetary policy and the ECB doubles down on extraordinary measures, we certainly should hope for the best. But we should also be planning for a substantial rise in financial and economic uncertainty.
Mohamed El-Erian, Allianz
| Opinion

The global slowdown - China is not the problem
Today's slowdown is truly global, with economies everywhere contributing to it. We witness "disappointing" growth, quarter by quarter, year after year. The consensus pays too much attention to China as the cause. So what really is behind all this?
Dr Woody Brock, SED
| White Paper

A new challenge to factor-based investing
Disciples of factor-based investing need to respond to a new challenge - while factor analysis is valuable for two reasons, investors are better served by a strategy based solely on allocating to asset classes, a new study claims.
Robert Huebscher, Advisor Perspectives

Alternatives - the answer to your diversification dilemma
With traditional asset classes expensive and historically low yields on bonds compromising their role as a diversifier, investors are at a crossroads. Investors should be looking for alternative sources of return and genuine diversification.
Ashley O’Connor, Invesco Australia
0.75 CPD Resources

Member comments
Illiquid assets
A great piece. Cannot stress highly enough that frequently it is not illiquidity itself that is the problem, but investors own actions/reactions to it...
Dugald Higgins
, Zenith Investment Partners Comment


Is it deja-vu (all over again)?
Does it feel like we've been here before?  It's expected (again) that the Fed will raise rates at its next meeting, the situation in the Middle East is (again) alarmingly tense, currency wars are (again) rife, bond market liquidity is (still) tight, many believe some asset markets are (again) in bubble territory, yet for commodities, it's like the 21st century never happened. The more things change, the more they seem to stay the same! But does that mean that going forward, markets and asset classes will behave as in the past? Is it different this time? Or is it deja-vu (all over again)?
And that's the theme for Markets Summit 2016! We'll see you there. 

Illiquid assets – portfolio "must have"? Or "mirage"?
The case for and against illiquid assets is hotly debated. Indeed, other than fees, the battle between industry funds and retail super funds has been heavily fought around significantly differing levels of exposures to the main illiquid asset classes.
Dominic McCormick, Select Investment Partners
1 comment Opinion

Goal risk tolerance matters too
Risk tolerance is a key constraint in designing a portfolio, but it should also be considered a key constraint in establishing a client's goals for investing in the first place.
Michael Kitces, Pinnacle Advisory Group
| 0.25 CE | White Paper

Risk crossroad: Weather markets with multiple risk strategies
What is truly more important to investors - losing less or making more? While 36% of investors say they are ‘reviewing their need for downside protection’, only 8% are currently implementing it. Yet there are many strategies available to manage risk in portfolios.
Jon Shead, State Street Global Advisers
| 0.75 CE | Resources

QMTV: A risk awareness framework
QMTV, which stands for quality, momentum, transition and value, is a framework that can help investors manage the buy, hold and sell decision process through the various cycles as well as providing a crossroad signal.
Fidelity Worldwide Investment
1.25 CPD White Paper

The case for private over public equity
I have 80% of my personal assets in private equity - and I plan to increase that to roughly 100%. I don’t have many other good ideas as to what to do in this environment.
Dr Marcel Erni, Partners Group

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