The most recent evolution in index investing has been a drift into the active world. Until recently, active passive investing has not been subject to much analysis. The two papers considered here begin to make some inroads.

Ron Bird | 2.50 CE

Certified Investment Management Analyst (CIMA) is the peak, international technical portfolio construction certification program designed for investment management analysts - that is, those involved in any aspect of constructing multi-manager, mulit-asset portfolios, whether practitioner or advocate.

Certainty shapes human behaviour. The more certain we are in our beliefs, the more they drive our actions. In contrast, uncertainty can cause anxiety and distress, diminishing our ability to identify opportunities and make rational, good quality decisions. For portfolio construction practitioners, who must build multi-asset portfolios in a volatile, uncertain, complex and ambiguous (VUCA) World, coping with uncertainty is integral to building better quality portfolios. A whole-brain approach to portfolio construction, reflecting knowledge and skill in both the Investment Factors (markets, strategies and investing) and the Human Factors – beliefs, behaviours and principles - is key. Finology Summit focuses on the Human Factors that influence portfolio construction, to help you better deal with uncertainty and build better quality investor portfolios.

Confidence in a sea of confusion is key to success. Using three tools of persuasion, we can create a sense of certainty even when who knows what is just around the corner.

Adam Ferrier | 0.50 CE

Decision attribution analysis provides a crucial lens on equity manager skill, benefiting asset owners and fund buyers as they select and monitor managers.

Clare Flynn Levy | 0.50 CE

The essential idea of the whole brain approach is that high levels of competence in most practical disciplines require that “hard” skills are balanced with “soft” skills, including more general types of knowledge and abilities such as systems thinking, “historical thinking,” ethical thinking, and self-awareness. This is particularly true in the complex and dynamic world of portfolio construction, where there exist multiple “schools of thought” for understanding markets and constructing portfolios, as well as a range of social and situational dynamics that shape real-world practice. In the absence of an unambiguous “right” way to think through or make decisions in all situations, a whole brain approach advocates for flexible engagement with different perspectives, frameworks, and types of thinking in pursuit of more informed and adaptive judgement and decision-making in portfolio construction practice.

Investors today have more knowledge than any prior generation, however there remains a chasm between knowing and doing. Acknowledging we are all biased, because we are all human, is the first step to better decisions.

David Wanis | 0.25 CE

ESG is no longer enjoying its honeymoon. ESG strategies – whatever that means – have underperformed in 2022 and ESG investment is coming under increasing criticism from politicians, regulators, investors and even practitioners. Some of this criticism is valid but at the heart of the problem is uncertainty arising from the widespread use of an acronym with no – or rather many - common meanings. It is right to question ESG practices, but they have merit and will continue to be increasingly important to investors and by extension, the investments and wealth industry. The real problem is the ill-defined use of the acronym itself and we will all be better off if we stop using it.

Traditionally, investors’ access to Commercial Real Estate (CRE) Debt has been limited. However, the rapidly growing activities of Non-bank Lenders (NBLs) have enabled private investors to access this $400bn asset class, offering a broader range of investment philosophies and generating institutional grade investment opportunities. CRE Debt provides dependable returns, backed by real property first mortgages – a risk-adjusted return basis, every balanced portfolio should include an allocation into CRE debt.

The energy transition represents the greatest economic opportunity since the industrial revolution from 1760 to 1840. Reliably capturing the potential of this opportunity and delivering tangible environmental impact will require investors to assume a posture shaped by three core beliefs: that their legacy ought to be a net-zero world, not just a net-zero portfolio; that they should seek economic leverage, rather than exposure, to the energy transition; and, that they should pursue value accretion in their portfolio rather than growth.

Alternatives should be in every diversified portfolio. Private Equity delivers unmistakable benefits and growth potential, especially in uncertain markets. Unlisted assets, with their proven long-term performance, provide access to a bigger opportunity set that reflects active management in its truest form. Investment into private markets gives managers greater control and influence to transform underperforming businesses. Possibly also influenced by market uncertainty, many businesses are staying private for longer, opening great opportunity for investment managers to continue to diversify their multi asset portfolios with rich investments across many diverse industries.

In research undertaken in partnership with National Seniors Australia, Australian seniors told us that they were feeling the impact of inflation on their lifestyle in retirement. They were concerned about the cost of living and outliving their savings. They want regular income, income that increases with the cost of living, income that lasts a lifetime and access to capital when required. I believe that a partial allocation of retirement savings to a contemporary lifetime income stream can help increase the certainty of delivering what clients want. Such an allocation can deliver more income and with increased certainty. And, contrary to common opinion, such an allocation can help clients preserve assets.

All relationships are built on trust, which requires integrity, competence and doing the right thing. But to earn justified trust from clients and deliver consistently good outcomes for them, year after year, requires practices and procedures that go beyond compliance obligations to globally recognised fiduciary standards of care.

The best investment opportunities exploit uncertainty. These are found by exploring setbacks and change. However, conventional investment training is number-centric, while I argue investing is all about people. Investors must understand companies and their customers and competitors, the motivations of other investors and, importantly, themselves. Empathy is key, yet industry convention emphasises modelling skills and cultivates auras of certainty. To better develop the skills required to analyse corporates, one can start with individuals as case studies and scale from there. If analysts can’t do that, it’s unlikely they can address more complex situations.

… though not unconditionally. Behavioural scientists have long embraced the view that emotions are not only unnecessary but disruptive. Yet the nascent field of Neurofinance, which studies how the brain perceives and reacts to financial risks, suggests that emotion is central to rational decision-making, and investors attuned to their emotions can make better decisions during critical market events. At the same time, 'too much' emotion can lead to financial mistakes caused by panic and irrational exuberance. The challenge, therefore, is for investors to learn how to be attuned to their emotional brain without being overwhelmed by it.

As Australians approach retirement, there can often be a sense of trepidation about what lies ahead. Constructing a retirement portfolio can be complex.

Retirement strategies must adapt in line with markets and demographics trends and the additional risks that are relevant for investors in decumulation.

Mark Lapedus | 0.50 CE

One of the main goals of investing is to provide for income in retirement – spending! A critical part of any retirement plan is a spending plan (which is not the same as a budget!), that sets out how much money can be safely spent each year, and how this amount may vary depending on changing circumstances and changing market returns. Ultimately, a good spending plan helps keep clients’ investments on track.

Finology Summit will help you grow your knowledge and understanding of the "human factors" – beliefs, behaviours and principles – that influence portfolio construction, to help you build better quality investor portfolios. The focus of this year's program is "Uncertainty". Designed and curated by our specialist, experienced and independent team, the program features an exceptional Faculty of experts from around the world, each offering a high conviction perspective on a facet of investment uncertainty and/or certainty.

ESG analysis advances and drives sustainable investing by helping investment practitioners develop a clearer view of a company's true market value, consistent with their fiduciary duty.

David Blood | 0.50 CE