Strategies

MPT... dead or alive?
Tim looked at how most asset allocation was being done and showed how it has its origins in Modern Portfolio theory. He then showed the core assumptions underlying MPT and whether it matters whether or not they are true. Finally, he examined two key points. Firstly, after 40 years of equities underperformance in all the major markets by August 2009, we can no longer assume that equities outperform in the long term - so how should that change the way portfolios are built? Secondly, can bubbles be clearly identified and, if so, what should be the minimum allocation to an asset class that is clearly entering a bubble?

Tim Farrelly, Principal, farrelly's

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Markets/Strategies

The outlook for long-term returns
This session revisited the most reliable approach to forecasting long-term returns from financial markets, and reviewed the current farrelly's forecasts for returns from 2009 to 2019 for six core asset classes: Australian equities, International equities, Listed Property, Fixed Interest, Hedge Funds, and Cash.

Tim Farrelly, Principal, farrelly's

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Markets

Green shoots or shot to bits?
Chris discussed the current state of the global economy, and the key macro economic issues including where markets were headed. He outlined some alternate paths, to help delegates assess the risks in the market at that time. How quickly would economies around the world recover from the Global Financial Crisis? Did Australia occupy a special place in the world or would it enjoy much the same ride as everyone else? Would the global rescue plans work or were we headed for a hyperinflationary disaster? And critically, what did all this mean for investment returns for key markets over the next decade?

Chris Selth, CIO/Lead Portfolio Mgr, Five Oceans Asset Management

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Slides >

Strategies

New frameworks for asset allocation - Harvard, Yale and the rest
In this session, Tim reviewed some new asset allocation frameworks and demonstrate how they could be adopted in practice. The Harvard and Yale endowments have been the envy of the investment world for over a decade. At around US$25 billion and US$16 billion respectively, these two huge funds have managed to outperform their peers by staggering margins. Tim described how they have done it, the secrets to their success - and how much could be applied into client portfolios.  Finally, it contrasted traditional return maximising strategies with risk minimising strategies - the results are often startling, with many clients finding they can maximise their retirement spending by minimising returns and risk.

Tim Farrelly, Principal, farrelly's

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Strategies

Where's the asset allocation alpha?
David runs a highly successful global macro fund. Like Chris, in this presentation, David gave his view of the current state of the global economy, and the key macro economic issues including where markets were headed.  He outlined some of the keys to successful tactical asset allocation.

David Hudson, Chairman Asset Allocation Committee, BlackRock Australia

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Strategies

The outlook for alternatives
Hedge funds had failed in the Global Financial Crisis, commodities had collapsed, trees had fallen down, unlisted property had been frozen. Tim discussed whether it was therefore time to get into some of these alternative investments, or whether alternative assets are just another good idea that got completely out of hand.

Tim Farrelly, Principal, farrelly's

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Strategies

Managing the secure side of portfolios
With fixed term deposits rolling over at very low rates, cash returns even lower, and credit spreads high but the risks even higher, where should we turn when building the defensive side of client's portfolio? Would the seemingly inevitable future high inflation kill long dated bonds somewhere down the track? How do we find secure assets that will give a half decent return? Tim presented a surprisingly simple approach that helps cut through the clutter and ensure sound decisions in this crucial part of the portfolio.

Tim Farrelly, Principal, farrelly's

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Markets/Strategies

Opportunities and risks in credit
Michael discussed the role of credit risk in a portfolio including the current opportunity set, the relative merits of domestic listed versus a global portfolio, listed versus unlisted debt, how to get the best exposure, and what could go wrong.

Michael Korber | Head of Credit | Perpetual Investments

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Strategies

My key takeouts
Delegates discussed the key take outs from the day - what they would do differently as a result of the presentations, discussion and workshops - resulting in this paper.

Edwina Best, Director, Gateway Financial Marketing

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