If the EU were a soccer team, it would not lose games for lack of a plan or inadequate capacity. The problem is that the team is not playing cohesively, and the top players are struggling individually.

A recent research paper looks at the impact of "The Donald" on markets, while a second examines the impact of robo-advice on investor behaviour.

This paper studies the long-term returns of US equities to determine whether earnings yield is a reasonably reliable estimate of forward real returns. Understanding the interplay of growth, value and yield provides a framework for assessing investments.

An inflation target of a few percentage points may seem to promote stability - but we need to consider that it may have the opposite effect on the stability of our judgments.

This view has dominated finance theory for the last 50 years or so. But prices change because people trade, and those trades leave behind a trace of all the behavioural biases people bring.

Chess masters can play simultaneously against several players. The more time passes, the more US President Trump's international economic strategy looks like such a match. There are three games.

Two recent papers looking at hedge funds provide further evidence that the more proactive managers are the best performers.

Buffett called Bitcoin rat poison squared, Schiller called it a financial bubble. We disagree. Bitcoin is perhaps the most important financial innovation ever. And it is one step closer to "ideal money".

When China finally has its inevitable growth recession, the world is likely to discover that China's economy matters even more than most people thought.

The US economy needs to slow down. The key question is what causes it to slow and which markets fishtail as a result. It is time to be very careful with portfolios.

Where portfolios are invested to achieve goals, the first step in the process should be to align the investor's goals - not the portfolio - to their risk tolerance. Implementation is then straightforward.

It wouldn't be surprising if the 10-year T-bill rises to 5% or more in the next few years, taking real yields back to over 2%, and causing the P/E ratio for US equities to return to its historical benchmark.

Ex-CIA Acting Director and economist, Morell worked with six US Presidents. He explains the current geopolitical inflection point that will affect the world economy for a very long time.

Banking and finance are an extreme case of governance and policy failures, where the abuse of power and lack of trust in institutions undermine capitalism and democracy.

We give a 20% chance to a US corporate debt bubble burst before end 2020. It is both incredible and unconscionable that massive leverage could once again bring down Main Street a mere decade after 2008.

It was inevitable. Another upturn in the US inflation cycle is at hand. The Fed is entirely correct to send the message that there is considerably more to come in its current tightening cycle.

It is a common misconception that profit and impact are mutually exclusive. In fact, managing for mainstream risk-adjusted returns and creating a positive impact can be achieved in parallel.

Potential returns on traditional assets are falling and the search is on for different sources of attractive returns. The Australian Asset Backed Loans asset class deserves a place in many portfolios.

Since the global financial crisis, people have searched in vain for a more productive integration of finance, behavioral economics, and macroeconomics. The publication of a new book gives hope yet.

Two recent research papers on investment management look firstly at the implications of overconfident managers and, secondly, at career risk associated with poor investment performance.

There is no silver bullet to portfolio implementation. Both managed funds and managed accounts can provide a more streamlined and sophisticated portfolio implementation solution – and both have pros and cons.

The world is getting very interesting. Two strong forces - the US economy accelerating vs tariffs getting bigger - are creating a tug of war that means you need to have a bet each way.

There are many lessons to be learned as we reflect on the 2008 crisis, but the most important is that the challenge was – and remains – political, not economic. Secular stagnation was just an excuse for flawed economic policies.

In the 1950s, Markowitz showed that low or negative correlation is the secret sauce that makes diversification work. While his maths stacks up, the way it is often abused, does not.

As we mark the decennial of the collapse of Lehman Brothers, there are still ongoing debates about the causes and consequences of the GFC. By 2020, conditions will be ripe for a new financial crisis.

Portfolio Construction Forum's 23-page submission to FASEA in response to its proposed guidance on future CPD explains why the proposal is fundamentally flawed, and falls well short of any reasonable community expectation of FASEA and what drove its formation.

Markowitz informed us of the risk-reduction advantages of diversification. But just how diversified does an investor have to be to realise almost all of the benefits of diversification?

The fallacy that an inverted yield curve "predicts" the onset of recessions is alive and well. Many investors believe the curve will invert in 2019, precipitating a recession. But a flattening of the yield curve need not imply a recession.

In the cyber world today, we are somewhere around World War I. There are more than 30 nations with effective cyber forces. Practitioners need to understand the threat cyber weapons pose to markets and investments.

The People's Republic of China (PRC) invests heavily in high technology research. While the world will certainly benefit from the PRC's technological ambition, it also has challenging implications.

Machine learning algorithms are no match for the human brain when it comes to deciding how investment portfolios should be constructed.

Investors like to have their cake and eat it - i.e., they like investment returns (the higher the better) but dislike volatility (particularly negative returns). It is possible to engineer investment returns that meet those requirements.

A disciplined, scenarios-based approach to determining your views on the outlook for markets and the asset allocation implications can help future-proof portfolios. This hypothetical Investment Committee meeting considers the asset allocation implications of three scenarios.

The Australian (and global economy) is facing decades of significant technological change that will reshape how we work, where we work, and how we relate to each other economically and politically.

Harry Markowitz called diversification "the only free lunch in finance". But it can’t be taken for granted as not all diversification is good. The answer will often lie with good rules of thumb.

Investors should treat foreign currency as an asset class in its own right, considering both short- and long-term currency risks, as well as where the best return opportunities lie.

Unconstrained strategies can be supportive in both maximising portfolio returns and reducing risk but a clear philosophy and framework for apportioning risk in unconstrained portfolios is key.

Investors need to entirely rethink their processes, assumptions and research approach, to focus on the cultures of consumers in different markets. Only by thinking like new brands themselves, can investors identify and invest in the next powerful emerging trend.

The familiar phrase “Past performance is not indicative of future performance” is so common we almost ignore it, but it goes to the heart of how to view and manage risk and return to future-proof portfolios.

Investors should learn the lessons of history. Looking beyond near-term valuation multiples can help identify the next great winners and also help avoid the losers. Without growth investing, a portfolio is only focusing on only one side of the equation.

The decision to use active, passive, or both types of investments in portfolios is too often framed as an either-or debate. Both have the potential to help future-proof portfolios.

Future proofing portfolios is difficult, due to today’s demanding valuations and because the future is intrinsically unknowable. There are no set-and-forget strategies in a world of ever-changing prices.

Not all factor investing strategies are created equal. Investors embracing factor investing need to understand some core principles to create a future-proof portfolio.

As disruption transforms global economies, and markets become ever more efficient, effectively integrating material ESG factors will help build robust and resilient portfolios.

A robust approach to asset allocation focusing on factors that do have predictive power – valuations and trend – can create a portfolio that is robust to changing markets.

FASEA's proposed CPD standards will fail to lift the educational standards required of an emerging profession, as they only address the 'Continuing' aspect of CPD, and ignore the crucial 'Professional' and 'Development' elements.

Global Asset Back Securities were directly tested and survived the challenges of 2008. In this rising rate environment, they are well placed to help "future-proof" portfolios.

The investment opportunity in EM is greater than just the companies domiciled there. In essence, investing in global growth should not simply be defined or determined by where a company receives its mail.

The impact investment market is growing. There is growing evidence that investing for return while generating a positive impact is a holistic way to create portfolios that are fit for the future.

Businesses adapting successfully to disruption exist across all industries and can be identified irrespective of prevailing market conditions. Finding those with improving earnings outlooks can deliver a future proofed portfolio.

Many of Australia's small companies are potential future leaders. A sharp focus on corporate governance can help identify those high quality, sustainable businesses that can last the distance.

To improve the accuracy of intended portfolio risk, investors should consider using a style neutral global equities fund to offset the likelihood they’re already invested in heavily style-biased portfolios.

Infrastructure as an asset class has helped investors meet future needs through four very different recessionary periods, reinforcing the need for allocations to the asset class.

To future-proof portfolios, investors looking to maximise returns should regard risk simply as the risk of losing money and in turn, best manage this risk by taking a long-term time horizon.

Investment portfolio construction is, by definition, an exercise in long-term thinking. Given the uncertainties and competing priorities, are future-proof portfolios achievable? Practitioners share their views.

There will always be movements in markets that we need to be attentive to, and you should construct a portfolio that takes advantage of fear. But don't let that fear drive the dominating principles in your portfolio construction.

To future proof portfolios, you need human skill and judgment to distinguish between the purely random and real investment insights. This is the power of combining machines and humans.

An aging population, maturing superannuation system and government policy are dramatically increasing the need for effective solutions for the retiree population.

Due to biases in investing, Sharpe ratios of investor portfolios are often not as high as investors expect. How low can a random walk of a Sharpe ratio wander through the natural realisation of risk?

We are all forced to invest to get a return, but as an industry we have overcomplicated this and at times not delivered. Work from first principles - let simple, a priori return potential be your guide.

Research shows that owner-manager businesses reward their long-term (non-family) investors because they instill a stability, a culture, and a focus that is geared towards the long term.

AI-based investment solutions will change the landscape much faster than expected - and the importance of making good human decisions will be amplified.

Given the key defensive attributes of Australian private debt, at this late cycle phase of the market, it should be included in all portfolios that are able to invest in illliquid assets.

It is vital to think about both the risk and opportunities that sustainable investing provides and define a framework that matches your investment beliefs.

The future is, by definition, uncertain, as are financial markets. To prosper in such an environment, we need to be emotionally agile in order to align our values and actions and, in turn, help investors achieve their financial goals.

Investors have long relied on two crystal balls when predicting future returns: equity risk premium and the yield curve. Crystal balls have their place, so long as they are combined with an uncommon degree of common sense.

A disciplined, scenarios-based approach to determining your views on the outlook for markets and then the asset allocation implications can help future-proof portfolios.

Future-proofing isn’t about guaranteeing an outcome. No strategy can do that. It's about implementing strategies today that increase the likelihood that multiple objectives, often with different time horizons, can be all achieved.

'Future-proof portfolios’ are entirely achievable. Given the complexity of developing retirement investment strategies, a ‘whole-of-portfolio’ approach and framework is warranted to achieve better long-term outcomes for clients.

If US bond rates go higher from here, it is likely to be in response to something we don't yet know, rather than what is already out there. Markets are not nearly as dumb as many suggest.

Re-evaluate the conventional assumption that owning government bonds is inherently defensive and risk diversifying. At best, it's an expensive choice and at worst, it won't work.

November 2018 will mark the tenth anniversary of quantitative easing - undoubtedly the boldest policy experiment in central banking modern history. There are five key lessons learned from QE.

Differences in regulation, politics, and transparency between Asian countries are all factors that cannot be captured by passive investing but which represent opportunities for active investors.

A recent study gives us a better understanding into the decisions made by older Australians between consumption and saving.

The sustainability of global growth depends largely on the US and China. One hopes that someone close to Trump can turn him around before his policies derail the world's long-awaited recovery.

For the first time in a decade, the biggest risks are now stagflationary (slower growth and higher inflation). It would seem that the current risk-off era is here to stay.

An Investment Committee is key to a well-constructed portfolio. Your IC's toolbox must contain the appropriate tools, making governance a key pillar of your portfolio construction process.

For 10 years, the world chased yield - flows into emerging markets were massive. As rates rise, money will move to safer environments. It’s time to protect portfolios against major outflows from emerging markets.

There is quite a bit happening on the geopolitical front right now to concern markets. With all this uncertainty, the best thing to do is nothing. Sit tight and enjoy the show.

Trump and team continue to flaunt virtually every principle of conventional economics. A trade war may well be an early skirmish in a much tougher battle, during which economics ultimately trumps Trump.

A fundamentally driven and benchmark unaware exposure to smaller companies within the emerging markets sector, this fund represents a unique way for investors to access emerging markets.

Game changer or new danger? The rise of passive funds throughout this decade is recalibrating the traditional core-satellite portfolio model.

Since the GFC, the value of non-financial companies' outstanding bonds has nearly tripled. While a correction seems likely, the broad shift toward bond financing is actually a welcome development.

There is often confusion about income in retirement. In most cases, some income measures won't give retirees enough to spend, resulting in a lower standard of living than they could be enjoying.

Over the years, I've seen countless portfolios. Virtually all have had a pre-defined asset allocation aligned to a risk profile. But occasionally, that's where the alignment ended.

Two recent academic papers focus on how advice provided to investors might be distorted. The first relates to the disposition effect; the second looks at the impact compensation on advice given.

The euro was supposed to bring shared prosperity, which would enhance solidarity and advance the goal of European integration. In fact, it has done just the opposite, slowing growth and sowing discord.

With US unemployment running at just 3.8% (equal lowest rate since 1969), the Fed will have to hike rates four times this year, with the risk that bond yields go not just to 3.5% but somewhere well north.

Over-the-top streaming will become the dominant form of media consumption, and Netflix will be the dominant global provider. Near-term valuation multiples may ultimately prove cheap.

Quantitative Tightening is jangling the nerves of investors around the world. It's unprecedented and so no-one knows for sure exactly how it will play out. But all the evidence points to QT being a non-event.

There are now nearly 2,000 cryptocurrencies, and millions of people worldwide are excited by them. As with past monetary innovations, a compelling story may not be enough.

New means test rules for pooled lifetime income products, together with development of CIPRs, have the potential to radically alter Australians' views on retirement income products.

Many asset classes - such as real estate and infrastructure - face the same valuation headwinds as equities and bonds. Practitioners should consider using cash as the diversifier for multi-asset portfolios.

Calm returned to global stock markets in May. But investors should not be lulled into a false sense of security. Equities and bonds face considerable headwinds as the Fed continues to tighten.

Eugene Fama described momentum investing as the one remaining market anomaly. A recent paper gives an explanation for it. Another shows it still offers high profits after implementation costs.

Many baby boomers are retiring with decent super balances and need advice on spending their retirement savings appropriately. Consuming capital for a higher standard of living is, after all, what super is for!

It is generally accepted that stock markets provide long-term outperformance over cash. However, a recent academic research paper reveals this is not the case for the majority of stocks since 1926.

In a presidency that has shown little regard for conventional institutional norms, how can one explain Donald Trump's completely reasonable appointments to the Federal Reserve Board?

President Trump's protectionist threats have raised the risks of a serious trade war, the first in over 80 years. It is assumed that this would materially impact US growth - but is that the case?

Investors are increasingly questioning the continued relevance of bonds in their portfolios. But bonds offer enhanced diversification qualities during times of low growth, low inflation and market uncertainty.

The consensus view is that the Phillips Curve is dead. To understand it, you must understand the history of the model and the Kiwi who first researched the link between unemployment and wages.

Asset allocation is often regarded as the most important portfolio decision, with asset classes then populated by investments. But this two-step approach can an asset allocation and investment selection mismatch.

Around the world, populist economic policy seems to be in retreat. Even in Britain, a majority support a “meaningful vote” on whether the final deal with Europe is genuinely better than staying in the EU.

That's the view that Guy Debelle, Deputy Governor of the RBA, outlined in a recent speech. It's a timely warning - but what do we do with it? I think it depends on your investment time horizon, as do so many investment decisions.

Only by understanding two factors can practitioners mitigate the risk of permanent loss of capital in emerging market companies.

Nearly all recent initiatives of the Trump administration will prove to be macroeconomic blunders. The time has come to upgrade the credit quality of investment portfolios and to focus on the currencies of creditor countries.

As we consider the life expectancy of many clients, we should not be using any number in the 80s. A figure closer to 95 is both more realistic and provides a little buffer in case the individual lives longer than the average.

Fears of a US-China trade war contributed to recent stock market volatility. Practitioners must look beyond the market noise and focus on the medium-term outlook.

A retiree's spending will change over time. However, changes in spending profile over time are often ignored when it comes to retirement income planning.

The US/China trade confrontation is heating up and market analysts are scrambling to figure out what will come next. It's tempting to rely on historical experience but history is likely to be a poor guide.

Recent research examines the performance of active bond managers, and the impact of performance fees on returns of active equity funds and private equity funds.

Genomic medicine will radically change how diseases are diagnosed and treated. Healthcare valuations do not currently reflect the long-term opportunities in the sector.

Around the world, smaller companies are benefitting from robust economic growth, low base rates and balance sheet flexibility. Investors should focus on opportunities in Japan and Europe.

The time has come for national governments around the world to start issuing their debt in a new form, linked to their countries' resources.

About 30 years ago, Canadian researcher Don Ezra identified the ‘10/30/60’ rule - in retirement, 10% of income comes from contributions, 30% from earnings on investments before retirement, and 60% from investment earnings accrued after retirement. Does this rule still apply in Australia, given our current economic conditions?

The concept of diversification may seem to be second nature. However, some of its fundamentals are often misused and sometimes misrepresented.

There is now a 50% chance that the US Federal Reserve will hike interest rates more sharply than markets expect, leading to a recession in the next one to two years.

Neither policymakers nor markets should bet on the past decade's slow growth carrying over to the next. The best bet is that AI and other technologies will have a much larger impact on growth than up to now.

It is high time to end the hype. Bitcoin is a slow, energy-inefficient dinosaur. Most of the coins are little different from railway stocks in the 1840s, which went bust when that bubble – like most bubbles – burst.

The peddlers of the Bond-cano narrative give very different recommendations. Even if we buy the story, it's just not clear what to do - all of which suggests that it is just a wonderful narrative.

In my opinion, the asset-price volatility we have been seeing has little or nothing to do with changes in fundamentals. And the widespread use of machine-driven trading is likely making all of this worse.

It should come as no surprise that enthusiasm for economic and financial globalisation has faltered. Building consensus around a revised unifying paradigm will not be easy.

In nine pages, this paper says all that needs to be said on the ability of any of us to estimate the true value of financial assets. The next two papers produce conflicting findings on the impact of index investing on markets.

Was the recent market volatility predictable? Was the volatility exogenous or endogenous in nature? What lies ahead as regards inflation and interest rates?

When building portfolios, practitioners must consider that inflationary pressures may return and that "beautiful normalisation" may simply not exist.

With unemployment at 30-year lows in many countries, practitioners should consider the possibility that wage pressures may force policymakers to tighten more aggressively, triggering substantial equity market falls.

Let's be absolutely clear - the recent plunge in equity markets has almost nothing to do with inflation or a changing of the guard at the Fed.

Against the backdrop of legislated increases in financial adviser education, standards and ethics, finology must be seen as central to the curriculum of what financial advisers learn and how they practice, for professionalism to be complete.

Practitioners demand a trifecta from fund managers - performance, simplicity, connection. But many great investments are contrarian and uncomfortable.

Managed accounts have become increasingly popular with approximately A$40bn in assets. Prepare to ride the managed accounts tsunami or be left in its wake.

“Nobody cares how much you know, until they know how much you care,” cautioned Theodore Roosevelt. This is especially true when risk is involved.

Too much of our communication with end investors is either irrelevant, unintelligible to the average investor - or worse still, both.

While robo-advisors have been the big buzz as replacement humans, they’re not (and data proves it). Technology alone is not enough (otherwise everyone with a FitBit on their wrist would be healthy).

Behavioural biases - substitution, aggregation, and feedback risks, overconfidence, and limited attention and availability bias - distort money managers' perceptions and lead them to take risks they don’t see.

Government incentives may help to encourage downsizing but the decision itself may not be purely financial as recent research reveals.

Trust – the belief that those to whom we are vulnerable are both willing and able to act in our interests – is the no.1 factor in the decision to select and retain an asset manager.

The combination of man and machine - tech-augmented humans or "cyborgs" - can be more effective than either alone, posing the greatest opportunity to human financial advisers in the long run.

The Chinese authorities recognise the potential of blockchain technology and are outpacing the US, in the race to develop an "official" cryptocurrency. If the Chinese experiment succeeds, we may witness the start of a new epoch in monetary policy.

For Australian investors, are international markets still attractive sources of growth? Or is the Australian equity market more attractive? Do Australian sovereign bonds remain an anchor portfolio allocation for well diversified portfolios?

China’s Belt and Road initiative is expected to reshape the global economic landscape. However, the plan is poorly understood. It may generate political "returns" but opportunities for investors will be limited.

To paraphrase Mark Twain, reports of America’s retreat are greatly exaggerated. Even if China can sort out its long-term demographic problems, other big challenges loom.

In 2017, the global economy experienced synchronised acceleration for the first time in a decade. The regime shift now underway will challenge portfolio construction designed for the previous regime.

The diversification benefits of bonds increases in a low yield market, and bonds remain one of the best instruments available to investors looking for liability matching as they approach retirement.

Investors should focus more than ever on uncovering sources of idiosyncratic alpha, rather than relying on momentum or passive beta.

It is doubtful that "safe" exposures (global consumer giants) will earn investors strong returns from this point – shift gears rather to domestic European exposures.

Consensus appears to assume that electric vehicle adoption rates will increase dramatically. This view is misplaced. The impact on the oil price and equity market leadership is not something that investors are positioned for.

The global economy is approaching peak growth and investors should prepare for increasing left tail risks. This may be an opportune time to increase allocation to bonds as an insurance policy.

Structural change and the resulting earnings growth will always outrun interest rates in the long run, so as change continues to accelerate, investors need growth equities in their portfolio.

Whether an investor's investment horizon is three to five years, 10 years, or even 30 years, they would benefit from taking a generational perspective to enhance returns.

Data from the larger economies generally support the scenario of synchronised global expansion. The biggest risk to portfolios is strong growth and investors need to position themselves in anticipation of rising rates.

Simply holding bonds no longer diversifies an investment portfolio, with genuine risk diversification better achieved by exploiting currently under-priced risk premia in volatility and inflation markets.

Historical asset allocation methods will not generate appropriate returns in the period ahead, driving the need to be more dynamic to increase both absolute and risk-adjusted portfolio returns.

Will global synchronised growth drive earnings growth to a higher gear that warrants current elevated valuations? And should the early effects of technological changes influence investment choices now?

Bond yields may rise by up to 90bps a lot faster than the Fed is suggesting. It's time to consider what happens to your portfolio if bond yields change gears.

Technological change is advancing with unprecedented speed and scale. The early effects of these technological changes on growth, labour, policy and trade should influence investment choices now.

The US might have three to five years of additional growth ahead. Global synchronised growth is likely to drive earnings growth to a higher gear that warrants current elevated valuations.

Are we in for a global inflation shock leading to significantly higher bond yields and a recalibration of relative valuations? Are we close to a one-in-a-generation change in the world's monetary order? Should we be switching gear with portfolios?

Global economies and central banks are changing gear. Should you be switching gear with your portfolios? To answer, you need a laser focus on what is important for you.

Every generation or so, things (in the economics world) break. Indeed, the history of the world's international monetary order is a history of change, occurring on average every 40 years. This current system is, therefore, long in the tooth.

A combination of factors is set to generate an unexpected inflationary shock to the financial markets, leading to significantly higher bond yields and a recalibration of relative valuations.

We are moving ever closer to the date when payment for today's recovery will fall due. Recent capital market gyrations suggest that awareness of the inevitable reckoning is already beginning to dawn.

There are themes and stocks that last for decades. Whether the investment horizon is three to five years, 10 years or even 30 years, it is likely investors will benefit from thinking about the universe of themes and stocks for generations to come.

Despite the view that computers will come to dominate certain areas within financial planning, the reality is that there are still ways that computer-human duos can be more effective than computers or humans alone.

While economics studies how humans allocate scarce resources, and psychology studies the human mind and behavior, there is a gap at the intersection between the two – an emerging new body of knowledge dubbed, "Finology".

Infrastructure assets have large environmental footprints. Incorporating ESG factors into the infrastructure investment process can improve risk-adjusted returns.

Every generation or so, things (in the economics world) break. We're probably at or close to one of those once-in-a-generation moments. Watching monetary indicators is key.

The general uptrend in the broader equity market seems set to continue given economic data globally remains robust and central banks very accommodating. Given divergent risks, investors should focus more than ever on uncovering sources of idiosyncratic alpha, rather than relying on momentum or passive beta.

Technological revolutions often spawn financial booms and busts - but the value proposition of blockchain is profound, and the technology has given rise to cryptoassets. Practitioners will increasingly be required to understand them.

There are five areas where the early effects of technological change on the world economy are believed to be investible today.

Headlines seeming to portend political instability and chaos have not prevented stock markets from soaring. What gives?

The holy grail is to find active managers who can add value. The combined insights of these two papers suggest avoiding large managed funds, especially those under the control of managers who run a concurrent SMA.

It is the time of the year when those in the forecasting business like to lay out our expectations for the coming year. Here are mine...

Income layering is a goals-based approach to building an investment portfolio that is likely to be beneficial to a wide range of retirees - especially those worried about how to sustain spending in the later stages of retirement.