Active Share can be an effective way to evaluate the appropriateness of a fund manager's fee. Low Active Share funds should come with index-fund-like fees.
Only 1 in 10 listed companies globally achieved sustainable, profitable growth over the decade. A disproportionate number had a founder still running the firm or who remains on the Board.
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?
Using a simple case study, this paper illustrates an approach to cutting through fund performance "noise" to find the signal - the bigger picture investment view that enables us to construct better investment portfolios.
Conference 2016 delivered 50+ high conviction ideas on how to manage the friction between short-term and long-term investing imperatives. Here are the key takeouts.
Conference 2016 featured a stellar lineup of international and local experts offering their best high conviction idea/thesis around the the friction between short-term and long-term investing imperatives - and the portfolio construction decisions that must be made.
Too often when analysing investments, the focus is on pure performance over too short a timeframe. We must lengthen the timeframe and adjust for risks, before we can begin to know whether value has truly been added.
Investors can harness the long-run benefits of active satellites like global small caps to drive better portfolio outcomes despite volatile markets.
While not traditionally known for income, there are thousands of dividend income opportunities among global companies which can provide income similar to Australian shares.
Real assets including real estate have overinflated valuations. Investors need to understand the frame work necessary to manage the trade-off between shorter term returns and longer term risks.
With global yields at record lows, bond market Cassandras proclaim the formation of a supernova, warning of the investment perils. It's time to spurn that talk, and stick with the core, defensive anchor provided by global fixed income.
Liquid alternatives have the potential to provide significant short- and long-term benefits for investors. It is important to not let common misconceptions about liquid alternatives undermine their potential benefits.
Provided investors define infrastructure in a disciplined manner, investment in infrastructure will continue to deliver investors reliable earnings over time.
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?
Client needs are changing. And these changes will challenge asset managers, especially as the industry goes through consolidation.
Cost structures will continue to evolve rapidly, as more firms and individuals realise that cost is the one component than investors can control, to improve their outcomes.
Finding patterns in data to make money in falling or rising markets relies on an empirical, skeptical, scientific mindset to identify signals.
Listed and unlisted infrastructure investment are complimentary ways to access the same underlying cash flows. But varying investor time horizons impact the investment returns both targeted and achieved.
Increasing equity exposure for retirees does not have to be a daunting move. Breaking down the index shows that income and not capital has been doing the heavy lifting over the longer term.
The active versus passive debate is being displaced by active versus smart beta. Active managers need to demonstrate that their investment philosophy is designed to exploit inefficiencies that are sustainable over time.
Demographic trends give a solid basis from which to forecast beyond the usual two-year time horizon. Demographic layering of equity investment decisions can be a powerful structural growth tool as well as a strong risk mitigator.
Finance principles tell investors to buy good companies at attractive prices and they should perform over the long term. But what worked last century won't necessarily stand true this century.
Australia’s bond market has evolved over time. As it grows and sub-sectors emerge, investor must ask – is my defensive allocation true-to-label?
Active fund groups with the right combination of culture, technology and philosophy enable investors to protect and grow their capital in a complex world.
Passive investment has flourished since the GFC but we are entering a new environment where active management will thrive. The opportunity for practitioners to add value has gone up significantly.
Investing is supposed to be about the incremental replacement of human capital with financial capital over the long term. But today's environment and our behavioural biases conspire against such a pure case.
Rising liabilities and low expected returns are driving a greater focus on outcome-based strategies and factor investing.
Data overfitting is a well known problem and one would expect clever statisticians and scientists not to succumb to its temptations. But "meta-overfitting" may be endemic in finance.
A satellite allocation to global small caps can increase portfolio efficiency over the long term.
A new breed of companies – creative, nimble and networked – offer a powerful investment opportunity. Investors need to consider diversifying domestic exposures to access this set of long-term opportunities.
Amongst fundamental managers, it is critical to distinction those that are genuinely active and achieve high active share and tracking error through generating idiosyncratic returns.
Critics charge that liquid alternative funds may not provide exposure to quality hedge fund managers and exhibit lower performance potential. This paper examines those concerns.
Maintaining a solid level of income for the retiree must remain at the forefront of thinking and a move up the risk spectrum into equities provides a solution.
As the Australian bond market grows and sub-sectors emerge, investor must ask – is my defensive allocation true-to-label?
The infrastructure asset class, when defined in a disciplined manner, generates reliable earnings - and for the foreseeable future, earnings of infrastructure assets should continue to be reliable.
Despite interest rates being at historic lows, there are thousands of dividend income opportunities amongst global companies that can provide income for a desirable retirement lifestyle.
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.
Investors are increasingly short term in their orientation. An arbitrage opportunity exists for managers with a longer investment horizon.
Tracking error constraints on active management focus on short-term outcomes and don't align with most investor goals, which are longer term. A low tracking error portfolio can often lead to an unfavourable outcome for end investors.
The listed infrastructure market provides investors with a broad, deep and liquid range of infrastructure investment opportunities.
Change is pervasive, whether at macro, sector or stock level. This argues for an approach that does not favour any particular investment style.
Managing the fundamental friction between short-term and long-term investing imperatives is a key challenge when building portfolios. This Backgrounder explores some of the key concepts and debates.
Bond market Cassandras proclaim the formation of a supernova, warning of the investment perils. It's time to spurn this talk, and stick with the core, defensive anchor provided by global fixed income.
The world of investing and business has seen a great deal of change in the past 30 years. Investors face a slew of psychological challenges. Here are the 10 attributes I believe to be the hallmark of a great investor.
With most asset classes offering limited return potential, there is a drive for more alpha, but finding it is not easy. Discount narrowing on LICs can be a valuable source.
New research has found that teams of three portfolio managers deliver higher gains, adjusted for risk, than funds managed by a single individual or by teams of other sizes.
It's 10 years since the Forum's publisher, Graham Rich, interviewed Hamish Douglass and Chris Mackay as the firm launched the now behemoth Magellan Global Fund.
By definition, Black Swans are unknowable - they should surprise us. But here are 10 "gray swans" complicating the outlook for markets and portfolio construction.
Many have spoken of the significant risks funds carry with Australian equities exposures. So I thought I'd check the evidence on the influence of equities on multi-asset portfolios.
Symposium facilitates featured a stellar line up of 20 international and local experts - including special guest keynote, Professor Niall Ferguson, PhD, internationally renowned economic and financial historian - offering their expert, high conviction ideas to help build better quality investor portfolios.
US private market home loans – income producing, low credit risk, low volatility assets that can generate a stable flow of monthly income - are one of many opportunities to consider for portfolios.
Our Symposium 2016 Faculty debated two high conviction ideas from the first day's program - firstly, the idea that delegates agreed with most and then, the idea delegates disagreed with most.
Gold stocks have become a great addition to portfolios - based on expected returns as well as their strong diversification benefits given a beta of almost nothing.
Australia is increasingly resorting to "debt bubble economics" - exactly what caused bubbles and major busts in the US and other economies in recent decades.
Retirement income planning is a relatively new field that differs from traditional wealth accumulation. Eight key ideas serve as a manifesto for my approach to retirement income planning.
The worlds of business, investing, and sports are awash in numbers, yet we rarely pause to consider what makes for a suitable statistic.
In the last 10 years, many companies from emerging economies have closed the corporate governance gap relative to their developed market counterparts. Such companies find themselves in a sweet spot.
Among the many challenges facing the EU - refugees, populist politics, German-inspired austerity, government bankruptcy in Greece and perhaps Portugal - one crisis is well on its way to resolution. Britain will not vote to leave the EU.
Like 2014 and 2015, Australian resources stocks in 2016 may look cheap but it is not an attractive trade. More reliable returns will be delivered by high quality companies well beyond the familiar territory of the 20 Leaders.
When central banks are taking to extreme policies, and Donald Trump has a decent chance of being US President, we need to be prepared for anything. Gold may not be the perfect hedge, but what is?
Three demographic megatrends support a number of structural growth themes that allow identifiable companies to benefit from strong and compounding cash returns over investible timescales.
The FSC has called for a cut in the company tax rate to 22%, funded by an increase in the GST. It's hard to see why FSC made this call, particularly given that its stated number one priority is "working to improve the well-being of all Australians".