Geopolitical risk, fundamentals, tracking error & infrastructure
This week, Fodder features the five top rated presentations from PortfolioConstruction Forum Conference 2016, each arguing a high conviction thesis around the theme, "The long and short of it (Is the concept of long-term investing increasingly irrelevant?)" BCA Research's Marko Papic argues that while terrorism gets the headlines, China's actions in the South Sea pose a far greater risk to portfolios, and PIMCO's Libby Cantrill looks at the likely impact of a Clinton or Trump presidency on markets. MFS Asset Management's Jim Swanson explains why focusing on fundamentals rather than market dynamics brings long-term rewards. State Street Global Advisors' Olivia Engel argues that tracking error only encourages investors to focus (wrongly) on short-term outcomes. And Magellan's Gerald Stack presents the case for infrastructure for reliable income, irrespective of short-term crises.
All the best for a great weekend's continuing education - Graham
P.S. The Conference 2016 Resources Kit is now online so you can "attend" and earn up to 17 CE hours (and if you were at the live program, there are still 16 sessions you can now "attend" and earn CE).

LATEST...

Markets/Strategies
Geopolitical risk? Ignore terrorism, focus on East Asia
Geopolitical tensions between China, the US, and countries of South East Asia are growing. Most investors dismiss the region as a risk. But we are at a precipice of a left-tail risk event.
Marko Papic, BCA Research | 0.25 CE | Resources
* Rated in the top 5 presentations by Conference 2016 delegates

Markets/Strategies
Unfavourable candidates can be favourable for the US economy
There has never been a more divisive US election season than the one we are witnessing right now. While the rhetoric and opinion polls are captivating on a weekly basis, the long game is what matters.
Libby Cantrill, PIMCO | 0.50 CE | Resources
* Rated in the top 5 presentations by Conference 2016 delegates

Markets/Strategies
Headlines battle facts, but fundamentals will prevail
As an investor, allowing yourself to be distracted by quick interpretation of market dynamics will lead to poor allocation decisions. Ultimately, fundamentals will win out for long-term investors.
James Swanson, MFS Investment Management | 0.50 CE | Resources
* Rated in the top 5 presentations by Conference 2016 delegates

Investing
Tracking error causes short termism
Tracking error constraints on active management focus on short-term outcomes and don’t align with most investor goals, which are longer term. So how else can portfolios be designed?
Olivia Engel, State Street Global Advisors | 0.50 CE | Resources
* Rated in the top 5 presentations by Conference 2016 delegates

Investing
Infrastructure provides reliable earnings irrespective of crises
Provided investors define infrastructure in a disciplined manner, investment in infrastructure will continue to deliver investors reliable earnings over time.
Gerald Stack, Magellan Asset Management | 0.50 CE | Resources
* Rated in the top 5 presentations by Conference 2016 delegates

Philosophy/Markets/Strategy/Investing/Finology
Backgrounder: The long and short of it
Managing the fundamental friction between short-term and long-term investing imperatives is a key challenge when building portfolios.
PortfolioConstruction Forum | White Paper

Currency is the ultimate alternative
Central banks (and other event risks...elections, wars, etc.) all do create volatility... and not just in the currency markets!
Dori Levanoni, First Quadrant | Comment

Long-term forecasting vs Short-term forecasting
While making the broad statement that long-term investing is a fools paradise the discussion seems centred on stock selection rather than the full gamut of long-term investing. Moving away from stock picking, other pieces of the investment puzzle really do lend themselves to a long-term point of view...
Tim Farrelly, farrelly's | Comment

RECENTLY...

Investing
The banks at risk of an Aldi moment - sell!
The latest reason offered as to why not to buy Australia's major banks is that their margins could be taken away by a well resourced disrupter. Should we not own the banks, as a result?
Tim Farrelly, farrelly's | Opinion

Strategies
The failure to understand rebalancing
We've been drilled that rebalancing portfolios results in improved returns and/or reduced risk. But the benefits of rebalancing are far smaller than we’ve been led to believe.
Michael Edesess, EDHEC-Risk Institute | 1 comment | Opinion

Markets/Investing
Long-term investing is a fool's paradise
A range of cognitive biases leads investors to generally overestimate their skill. A long-term investment strategy simply compounds this problem. A long-short investment structure can improve outcomes.
Tribeca Investment Partners | 1 comment | White Paper

Philosophy
Asset managers must adapt to serve their clients
Client needs are changing. And these changes will challenge asset managers, especially as the industry goes through consolidation.
Doug Hodge, PIMCO | Opinion

Philosophy/Markets/Strategy/Investing/Finology
Backgrounder: The long and short of it
Managing the fundamental friction between short-term and long-term investing imperatives is a key challenge when building portfolios.
PortfolioConstruction Forum | White Paper

Delta model
Michael's model is fantastic. We use it for researching managers and explaining decisions to clients...
Justin Hooper, Sentinel Wealth | Comment

Measuring recessions
...Couldn't agree more. Every time I drive in Sydney traffic I wish we were targeting GDP per capita as our measure of prosperity.
Tim Farrelly, farrelly's | Comment

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