1. Overestimating the EU economy

    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.

    Mohamed El-Erian | 20-12-18 | More
  2. Research Review: The Donald's impact on markets; Robo-advice & investor behaviour

    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.

    Ron Bird | 19-12-18 | 1.00 CE | More
  3. Earnings yield as an estimate for expected returns

    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.

    Douglas Isles | 17-12-18 | More
  4. Silent inflation

    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.

    Robert J. Shiller | 13-12-18 | More
  5. farrelly's Investment Strategy (Australia)

    Welcome to the farrelly's Dynamic Asset Allocation Australian subscriber only area...

    11-12-18 | More
  6. farrelly's Investment Strategy (NZ)

    Welcome to the farrelly's Dynamic Asset Allocation NZ subscriber-only area...

    11-12-18 | More
  7. farrelly's Dynamic Asset Allocation Handbook (NZ Edition)

    The quarterly Dynamic Asset Allocation is published electronically, and emailed to subscribers in early March, June, September, and December. It features farrelly's Editorial; long-term outlook for markets; Forecast in Focus; and three different approaches to Implementation...

    11-12-18 | More
  8. farrelly's Dynamic Asset Allocation Handbook (Australian Edition)

    The farrelly's Dynamic Asset Allocation Handbook features editorial exploring investment strategy "hot topics", farrelly's long-term forecasts for asset classes, a detailed review of the long-term forecasts for an individual asset class (rotating across asset classes each quarter) and three asset allocation models to assist with implementation...

    11-12-18 | More
  9. Are markets efficient?

    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.

    Jean-Philippe Bouchaud | 10-12-18 | 1.00 CE | More
  10. Accommodation

    Coming to a Portfolio Construction Forum program at Carriageworks, and looking for somewhere to stay? We don't organise accommodation for delegates, but we can point you in the right direction...

    29-11-18 | More
  11. The global economy's three games

    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.

    Jean Pisani-Ferry | 13-11-18 | More
  12. Research Review: The investment behaviour of hedge funds

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

    Ron Bird | 09-11-18 | 1.00 CE | More
  13. The global impact of a Chinese recession

    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.

    Kenneth Rogoff | 08-11-18 | More
  14. When clients need more risk - adjust portfolios or goals?

    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.

    Michael Kitces | 01-11-18 | 1 comment | More
  15. Falling share prices and the US economy

    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.

    Martin Feldstein | 31-10-18 | More
  16. Storm clouds for 2020

    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.

    Woody Brock | 25-10-18 | More
  17. America's inflation risks

    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.

    Stephen Roach | 24-10-18 | 1 comment | More
  18. Impact investing is the way of the future for fixed income

    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.

    Affirmative Investment Management | 23-10-18 | More
  19. Using Australian Asset Backed Loans in portfolios

    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.

    Tim Farrelly | 22-10-18 | 1.00 CE | More
  20. Self-fulfilling financial crises

    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.

    J. Bradford DeLong | 18-10-18 | More
  21. Research Review: Asset management, overconfidence and market discipline

    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.

    Ron Bird | 17-10-18 | 1.00 CE | More
  22. 5 essential issues - managed account vs managed fund

    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.

    Annika Bradley | 16-10-18 | 1 comment | More
  23. The myth of secular stagnation

    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.

    Joseph Stiglitz | 18-09-18 | 3 comments | More
  24. Find me some uncorrelated assets!

    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.

    Tim Farrelly | 17-09-18 | 7 comments | More
  25. The makings of a 2020 recession and financial crisis

    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.

    Nouriel Roubini | 14-09-18 | More
  26. The Forum releases its submission to the FASEA CPD proposal

    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.

    Graham Rich | 12-09-18 | 1 comment | More
  27. Research Review: Small portfolios are beautiful

    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?

    Ron Bird | 11-09-18 | 1.00 CE | 2 comments | More
  28. Today’s flattening yield curve: what does it imply?

    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.

    Woody Brock | 25-08-18 | More
  29. FASEA proposals fail to address the P and D of CPD

    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.

    Graham Rich | 23-08-18 | More
  30. A future proof portfolio should guard against pessimism

    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.

    Tony Crescenzi | 22-08-18 | More
  31. Investment crystal balls broken or imperfect

    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.

    Amin Rajan | 21-08-18 | More
  32. Designing for scenarios is critical to future-proof portfolios

    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.

    18-08-18 | More
  33. Future-proof portfolios

    '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.

    Rudi Minbatiwala | 14-08-18 | More
  34. Just how dumb are the bond markets?

    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.

    Tim Farrelly | 03-08-18 | 2 comments | More
  35. Does fixed income still diversify portfolio risk?

    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.

    Gopi Karunakaran | 01-08-18 | More
  36. QE turns 10

    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.

    Stephen Roach | 31-07-18 | More
  37. Why do older Australians save?

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

    David Knox | 24-07-18 | More
  38. The global economy's uncertain future

    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.

    Jim O'Neill | 23-07-18 | More
  39. Trump may kill the global 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.

    Nouriel Roubini | 19-07-18 | More
  40. 5 essential investment committee tools

    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.

    Annika Bradley | 17-07-18 | More
  41. We're on the cusp of an EM crash

    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.

    Brett Gillespie | 16-07-18 | More
  42. Geopolitics to the fore! Do nothing...

    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.

    Tim Farrelly | 09-07-18 | More
  43. When politics trumps economics

    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.

    Stephen Roach | 27-06-18 | More
  44. Undiscovered Fund: A unique way to access emerging markets

    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.

    Zenith Investment Partners | 26-06-18 | 1.00 CE | More
  45. Passive investing - reshaping the investment landscape

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

    Amin Rajan | 26-06-18 | More
  46. Are we in a corporate debt bubble?

    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.

    Susan Lund | 20-06-18 | 2 comments | More
  47. Most retirees need to eat capital

    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.

    Aaron Minney | 19-06-18 | 1 comment | More
  48. A few investment selection faux pas

    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.

    Michael Furey | 18-06-18 | More
  49. Research Review: Biases in recommendations

    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.

    Ron Bird | 15-06-18 | 1.00 CE | More
  50. Can the Euro be saved?

    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.

    Joseph Stiglitz | 15-06-18 | More
  51. Beware Quantitative Tightening!

    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.

    Tim Farrelly | 11-06-18 | 1 comment | More
  52. The old allure of new money

    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.

    Robert J. Shiller | 31-05-18 | More
  53. Will longevity products now become attractive?

    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.

    David Knox | 30-05-18 | More
  54. Masterclass NZ 2018 - resources

    Masterclass NZ is a post-graduate extension program focused on contemporary issues that are fundamental to building better quality portfolios. Each year, the one-day program features five research-based, active learning sessions.

    25-05-18 | More
  55. Research Review: More on momentum investing

    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.

    Ron Bird | 11-05-18 | 1.00 CE | More
  56. The difference for advice in retirement

    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!

    Aaron Minney | 09-05-18 | More
  57. Do stocks outperform Treasury bills?

    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.

    Nick Griffin | 08-05-18 | 1.00 CE | More
  58. Donald Trump's Normal Fed

    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?

    Kenneth Rogoff | 07-05-18 | More
  59. The true impact of a trade war

    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?

    Woody Brock | 04-05-18 | More
  60. The place of bonds in a low yield world

    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.

    Dean Stewart | 03-05-18 | 0.75 CE | More
  61. From asset allocation to risk allocation

    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.

    Michael Furey | 01-05-18 | 2 comments | More
  62. Is realism trumping populism?

    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.

    Anatole Kaletsky | 30-04-18 | 3 comments | More
  63. Markets aren't pricing rates to revert to the old normal

    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.

    Tim Farrelly | 27-04-18 | More
  64. Policy blunders and currencies

    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.

    Robert Gay | 20-04-18 | 0.50 CE | More
  65. The misunderstanding of life expectancies

    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.

    David Knox | 18-04-18 | More
  66. Understanding how people spend their money in retirement

    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.

    Aaron Minney | 12-04-18 | 2 comments | More
  67. The global trade game

    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.

    Mohamed El-Erian | 10-04-18 | More
  68. Research Review: Performance, fees and active managers

    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.

    Ron Bird | 09-04-18 | 1.00 CE | More
  69. Making the case for sovereign GDP-linked bonds

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

    Robert J. Shiller | 21-03-18 | 1 comment | More
  70. Revisiting the importance of investment returns in retirement

    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?

    David Knox | 19-03-18 | 2 comments | More
  71. Diversification - what it is and is not

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

    Michael Furey | 15-03-18 | 3 comments | More
  72. Economists vs scientists on long-term growth

    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.

    Kenneth Rogoff | 12-03-18 | More
  73. The blockchain pipe dream

    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.

    Nouriel Roubini | 06-03-18 | 1 comment | More
  74. Beware the Bond-cano!

    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.

    Tim Farrelly | 05-03-18 | 1 comment | More
  75. Rational irrational exuberance?

    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.

    Andrés Velasco | 02-03-18 | More
  76. Working toward the next economic paradigm

    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.

    Mohamed El-Erian | 01-03-18 | More
  77. Research Review: Everything you need to know and a bit more

    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.

    Ron Bird | 28-02-18 | 1.00 CE | More
  78. Comments on financial market turbulence

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

    Woody Brock | 22-02-18 | More
  79. Unwinding the great QE carry trade

    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.

    Robert Gay | 15-02-18 | More
  80. Is the stock market loaded for bear?

    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.

    Dambisa Moyo | 12-02-18 | More
  81. The next 30 years

    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.

    Bo Knudsen | 08-02-18 | More
  82. Finology and finding the higher purpose

    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".

    Michael Kitces | 08-02-18 | More
  83. What cyborg chess can teach us about the future of financial planning

    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.

    Michael Kitces | 08-02-18 | More
  84. Backgrounder: Finology

    Finology knowledge and skills will substantially enhances practitioners' ability to communicate with clients, and to manage portfolios more effectively. This Backgrounder seeks to foster greater understanding and interest in the field of Finology.

    Portfolio Construction Forum | 08-02-18 | More
  85. Things break

    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.

    Chris Watling | 07-02-18 | More
  86. The blind assumption of unendingly low rates is dangerous

    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.

    Antipodes Partners | 07-02-18 | More
  87. The impact of technology on economic growth

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

    JP Morgan Asset Management | 05-02-18 | More
  88. Giddy markets and grim politics

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

    Kenneth Rogoff | 19-01-18 | More
  89. Research Review: More insights into fund managers

    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.

    Ron Bird | 19-01-18 | 1.00 CE | More
  90. 10 "fearless" predictions for 2018

    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...

    Tim Farrelly | 18-01-18 | More
  91. Income layering: What? Why? When? & How?

    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.

    Aaron Minney | 10-01-18 | More