Three recent research papers continue to grow our understanding of how behavioural traits impact on markets. The first provides insights into Warren Buffett's success; the other two examine the markets' response to earnings information.
Plenty of anecdotes suggest that baby boomers are spending their savings and will leave nothing for the next generation. Looking at the actual data, this is questionable.
In the last decade, investor interest in long-horizon outcomes was rare and when it prevailed, it was severely tested by events. The long-term was viewed as opaque and uncertain. It's amazing how attitudes change when new opportunities emerge.
What influence do personal values have on our behaviour, as individuals? And how do those values interact with professional standards and ethics?
A recent research paper that likens the three main retirement planning approaches to shapes provides an interesting way to think about three different retirement planning approaches. In the end, the best option may incorporate all three.
A recent paper that addresses one of the most pressing issues facing the financial community - how to construct long-term investment portfolios to best fit the needs of those saving for retirement - questions the appropriateness of many commonly used techniques.
The 2017 mid-year SPIVA report on fund manager performance came out recently. And, while we can expect to see the media dwell on the negatives, there are some big positives in the data.
Having built some satisfaction that their retirement savings balance is sufficient, clients ask "How much can I afford to spend?"
Since President Xi Jinping's update at the National Congress of the CCP this month, commentators have furiously debated the theme of "China rising" and Xi's concentration of power in his own hands. They are missing the point.
The winner of this year's Nobel Memorial Prize in Economic Sciences, Richard Thaler of the University of Chicago, is a controversial choice. For some in the profession, the idea that psychological research should even be part of economics has generated hostility for years.
Twenty years ago, I predicted that the Digital Revolution would cause productivity growth to accelerate and inflation and interest rates to fall for a very long period. We now believe this trend will continue for at least another 10 and probably 20 years.
Magellan is innovating again, this time raising money for what's been called a "monster" closed-end listed investment trust (LIT) with features that dramatically raise the bar for the standard model of closed end listed investment vehicles.
Do you know the impacts of the risk characteristics of your multi-manager portfolio? Better portfolio construction occurs when you don't diversify the risk you are trying to capture. Beware the benchmark hugger - it might be you?
Shifts in economic and trade regimes and turning points in markets provide asset managers the opportunity to capitalise on short-term distortions in asset prices and to invest in companies that could be winners in the long term.
This paper explores the issues and challenges associated with longevity and sequencing risk, especially in the current market environment, and examines how alternative investments offer investors potential solutions for these risks.
Investors often shy from investing in “non-traditional” sources of Risk Premia, but to maximise the probability of achieving positive excess returns, a well-diversified and risk-controlled mix of Risk Premium strategies is essential.
Ensuring your investment process incorporates sustainability factors - climate change, global food shortages, water shortages, and poverty, as well as safety, management and governance scandals - adds up to better outcomes.
The outcome of selecting an active management strategy will likely be greater when both the creativity and predictability of the candidate are considered in equal measure.
Two recent studies shed light on retirement income planning. One proposes a framework to avoid the pitfalls of shortfall probabilities. The other finds biological age impacts spending rates.
Culture is at the heart of competitive advantage today; this is particularly the case for investment firms where people and their judgments are the chief assets. A strong culture in investment management firms is a requirement for sustainable alpha-generation.
The growing belief that the US has entered an era of permanently low economic growth, due in large measure to an alleged 50% reduction in productivity growth, is wrong. Both real growth and productivity growth have been strong, not weak.
When it comes to the active versus passive investment debate, many investors believe the answer is black or white. But the issue is deeper than that.
While the use of a discount rate to compare strategies or choices that are dispersed or occur over time is useful, the proper discount rate is the investor's expected rate of return, means that the "right" discount rate will vary from one person to the next.
This Guide aims to assist practitioners develop their investment policy framework, by providing a checklist of issues to consider, and publicly available examples from institutions in Australia and globally.
The classic view of cash when investing is that it's something to minimise. But a recent study found that we're just not content without a healthy allocation to cash. In fact, pushing investors to put all their cash to work increases their financial stress.
Literature from a variety of disciplines help highlight the qualities behind truly creative, contrarian thinking - qualities which can be applied to modern portfolio management.
Unlike other commonly used factors, very little research has been undertaken on the quality factor - which makes a newly released paper very interesting. Another new paper extends the usual momentum factor into "returns signal momentum".
Overall stock market risk has declined modestly in the last 80 years, but the nature of risk has changed greatly. The risk stemming from market mistakes and, possibly, from irrationality has risen significantly.
Despite increasing global political risk, the probability of outright war is paradoxically lower than it might have been at any previous period in history.
This paper presents evidence to suggest that an allocation to impact investments can contribute potential portfolio benefits from the risk-return profile and low correlation with other asset classes.
In a century of Federal Reserve tightening cycles, typically, the Fed has tightened too much and/or for too long. The current tightening cycle will not end any differently.
Opinions in the active-passive investment debate have drifted poles apart over recent years. This paper revisits this discussion finding that, unlike their stock counterparts, active bond mutual funds have largely outperformed their median passive peers over the sample period.
PortfolioConstruction Forum has partnered with University of Technology Sydney (UTS) Business School, to support the newly formed Investment Management Research Program (the IMR Program), a research initiative in the areas of capital market operations, financial institutions/intermediaries and institutional investors.
Home ownership is of critical importance for retirees. But compulsory superannuation plays a major role in ensuring low-income earners never gain access to home ownership.
Research suggests we mentally account for income and assets with an intrinsic hierarchy of priorities - a "hierarchy of retirement needs". So retirement income strategies should be reframed to answer three questions.
A more realistic view of the world is that price appreciation drives negative gearing - not the other way around. Abolish negative gearing and nothing much happens.
Markets Summit 2017 delivered 20+ high conviction ideas on how the winds of change are affecting the outlook for economies and asset classes - and delegates were asked to convert the insights into four fundamental portfolio construction decisions.
Markets Summit 2017 featured a stellar lineup of international and local experts offering their best high conviction idea/thesis on the opportunities and risks ahead as the winds of change sweep through economies and asset classes - and the implications for portfolios.
Finology Summit 2017 featured a stellar lineup of finology experts offering their best high conviction idea/thesis on how the winds of change are impacting how investors think and behave with respect to money, and how we can better relate with them (and help others who must do so).
A recent, widely circulated article suggested the major Australian banks are overpriced. But including the effect of imputation and a view on interest rates makes a huge difference...
Finology Summit 2017 focused on how "The winds of change" are affecting how investors think and behave with respect to money, and how we can better to relate with them. Here are our key takeouts.
In 2002, we embarked on a quest to identify the secular forces which would substantially influence markets over the coming decade. We proposed five megatrends - which still drive portfolio construction today.
With the onward marching of computing power, our transition from being "knowledge workers" to "relationship workers" may be here sooner than we realise.
The biggest event for global financial markets in 2017 is likely to have taken place on 20 January. How the Trump Presidency unfolds will clearly have a significant impact not just on the US but on global markets in 2017 and beyond.
Beware using risk tolerance assessment tools that blend risk tolerance and risk capacity into a single result. The two need to be measured separately.
Senior secured loans offer a combination of strong current income with relatively low volatility given their defensive position in the capital structure and short duration.
Like all presidents, Trump will be judged by how far he makes good on his pledges. It is important to distinguish between the real and the imaginary obstacles Trump faces.
How often should a portfolio be rebalanced? Rather than the conventional wisdom of rebalancing at fixed time intervals, a superior methodology is tolerance band rebalancing.