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...

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...

farrelly's Dynamic Asset Allocation Handbook (Sep 2021) (on-demand) has been assessed and accredited by Portfolio Construction Forum for Continuing Education (CE/CPD) hours. Those who attend online on-demand must complete a CE Quiz to receive CE/CPD accreditation.

farrelly's Investment Strategy provides subscription and consulting tools and services to enable a dynamic, forward-looking approach to asset allocation, a key driver of quality portfolio construction and quality results for investors...

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

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

In the 1990s and 2000s, investors were largely able to ignore the macro picture. But macro forces have reawakened and matter more than ever for portfolios to succeed in meeting client goals in the years ahead.

The outlook for emerging markets debt is growing increasingly bullish. The global economy is transitioning from a V-shaped recovery led by parts of Asia and the United States, to one in which emerging markets will outperform. Bouts of heightened volatility are offering attractive entry points to an asset class that offers much sought-after yield. With attractive valuations and global investors underweight the asset class, the case for a dedicated EMD allocation is growing ever stronger. As a means to defend fixed income portfolios against rising interest rates, EMD needs to end up back on the asset allocation agenda.

Style matters when constructing portfolios, but there are other characteristics in a manager that are as important, if not more important, in generating consistent returns over the long term. These include a high active share coupled with good risk management, high idiosyncratic risk and a proven track record of picking the right stocks. A manager selection framework based on academic research and historical analysis is the means to the end – finding such managers and building portfolios capable of generating consistent returns over the long term.

Private debt has stepped out of the shadows of the banking system to become an important supporter of business activity. All of the elements that have attracted the banks to this market for centuries - security against the borrowers’ assets, attractive risk-adjusted returns, steady income - remain in place. But private debt delivers them without the baggage of regulation and high fixed costs that apply to banks. This, plus the diversification and protection against rising inflation and interest rates, makes private debt essential to modern portfolios. If the end objective is an attractive risk-adjusted return, then private debt is the means to get there.

For decades, investors used the 60/40 portfolio as the default market proxy. The expectation was the 60% allocated to global equities would provide the growth, the 40% allocated to fixed income would generate sufficient income, and the relatively low correlation between the two provide diversification. Unfortunately, capital market assumptions are projecting a substantial reduction in global equity returns over the next 10 to 20 years, fixed income yields are near generationally low levels, and correlations among most traditional investments have been rising. In other words, the maths just doesn’t add up. Practitioners need to continuously upgrade their toolbox to achieve portfolio goals. We need to identify alternative sources of returns and income to help investors achieve their goals and objectives, and investments that can help buffer the inherent volatility of the global markets. Asset allocation and portfolio construction needs to consider an expanded set of solutions including hedge funds and private markets (private equity, private credit & real assets) so that portfolios are truly the ends to the means.

Portfolio construction practitioners have access to a broader array of investment research, strategies and tools than ever before. Yet the obstacles to meeting clients’ long-term financial goals are equally numerous, in an environment of record-high asset prices, massive fiscal and monetary stimulus, and heightened economic uncertainty. To assist individuals in achieving the ultimate goal of financial independence, practitioners must remain open-minded and continuously challenge their portfolio construction beliefs, techniques and tools.

Alignment of portfolios to meet non-financial objectives is an increasingly important consideration in portfolio construction. Investors still need to focus on income, growth or capital preservation – but a second layer of objectives is the ambition to enjoy those financial rewards in a world that can physically sustain the standards of living we demand. There are a growing number of techniques available to do that. Exclusion is one means to the end, but this can be sector/industry based or use a best-in-class approach. Engagement is important as investors put more pressure on companies to commit to a net-zero aligned path for emissions using Science Based Targets. There is no point in building wealth for the future if that future is one of frequent and catastrophic climate events that undermine our way of life.

When accumulating assets, investors typically seek to maximise their account balance around the time they retire, while managing the associated risks. This leads to a focus on the risk-return ratio and mean-variance optimisation. But in retirement these goals shift, and investors seek to convert their savings into a sustainable salary replacement with access to growing capital. The metric for success must also shift to accommodate these trade-offs. Retirement Utility, which generalizes the Members Default Utility Function, provides such a metric, reflecting investors’ risk averse preference for higher income and higher liquid asset values. This lens enables us to determine optimal investment strategies through reserving, and casts light on finding an efficient and effective means to the end - delivering great investment outcomes in retirement.

Many retirees are focused on the income return from their investment portfolios as the foundation for what they have available to spend in retirement. The flaws of income-oriented strategies have always been present, though the implications are now becoming more apparent, and the consequences could be about to bite. As the yields for most investments are historically low, and likely to remain low for several years, retirees may be tempted to reallocate to higher yielding investments, such as high yield bonds or equity-income strategies. This has led to some commentators to call the death of the traditional 60:40 portfolio. A total return approach presents a compelling alternative as it can support retiree spending strategies while removing the temptation to increase risk. So, in the end, total-return portfolios could mean better outcomes for retirees.

We all agree that, sadly, there is no such thing as the perfect company. This presents a great challenge for responsible investors. The companies that are solving the world’s greatest challenges - be they environmental or humanitarian – often have near term imperfections that see them starved of capital. A pragmatic approach is what’s required, one that embraces company imperfections and focusses on the big picture – the potential for positive societal impact. Thoughtful and constructive company engagement can help bridge the gap from good to great. But the term engagement has been caught up in the jargon and acronyms that increasingly pervade responsible investing. Ultimately, engagement is as much about support as it is challenge – a collaborative partnership where the end really can justify the means.

With more than A$3 trillion in assets under management, Australia’s superannuation system is one of the best-resourced retirement systems in the world. But for individual Australians, a reasonable standard of living in retirement can only be achieved with appropriate accumulation and decumulation solutions. As the Baby Boomer generation continues its transition into retirement and life expectancies rise, portfolio construction practitioners must be open-minded to ensure they have the retirement solutions needed to meet client goals right to the end of their days.

Markets and economies have benefitted from more than three decades of declining interest rates, as central bank inflation-targeting regimes, globalisation and new technologies helped keep goods and services prices in check. It is unlikely that this “great moderation” can continue throughout the 2020s. Stimulatory fiscal and monetary policies remain in place, despite rising inflationary pressures - in the US, at least. Meanwhile, a potential combination of Chinese deleveraging and tighter Federal Reserve policy raises the risk of deflation. Uncertainty around the inflation outlook is at an extreme – yet a view on inflation is a critical input to building portfolios capable of achieving client goals out into the future.

A disciplined, scenarios-based approach to determining your views on the outlook for markets is a vital means to the end – building portfolios capable of achieving client goals out into the future. Three economists describe and debate three plausible, forward-looking economic and market scenarios that have a reasonable probability of occurring during the next two to three years. These are then inputs to the Asset Allocation Roundtable later in the day.

Infrastructure has a key role to play in the world’s move towards decarbonisation and goal to reach net-zero emission targets by 2050. Government policy support and the unprecedented amount of capital required to achieve these targets should change how you think about investing in infrastructure assets. Global listed infrastructure is a means for investors to access this accelerating investment trend, through high-quality and geographically diverse liquid assets, but an active approach is critical to building out infrastructure investment opportunities. This multi-decade initiative is happening today. Now is the time to ensure portfolios are exposed to the net-zero investment opportunity infrastructure offers.

Everyone is going crazy about inflation. But will current elevated levels be sustained? Not likely. Post Covid-19, secular factors such as debt levels and demographics provide even stronger headwinds against inflation than the preceding decade ever did. In developed economies such as the United States and Australia, Consumer Prices averaged circa 2.00-2.25% this century. Current market inflation expectations for the next 10 years suggest CPI of 2.5%. That’s price stability, not inflation. Central Banks have created some room to allow inflation to run a little higher than traditional targets, but their aims are the same. In the end, it is prudent to consider the risks of persistent high inflation, but the means is not to flip portfolio asset allocations in response to the recent euphoria. Rather, asset allocators need to focus on and set their portfolios for the underlying regime of price stability.

Capital markets will be shaped profoundly as the economy transitions from a depletive economic model to a more sustainable one. Such transitions will inevitably create winners and losers. Within Environmental Markets, a host of macroeconomic factors is driving growth for energy efficiency, renewable energy, water, waste/resource recovery, food, and agriculture related markets. For asset allocators, recognizing such opportunities and seeking higher quality companies with strong business models is key to delivering excess risk-adjusted returns. The next economy is sustainable. In the end, a portfolio that is able to capture emerging alpha opportunities will be the means to long term success.

Building quality investment portfolios is not simple, yet portfolios are simply a means to an end – achieving client goals. Practitioner education, however, focuses heavily on developing technical investment skills, often to the detriment of time learning the knowledge and skills that enable better engagement and understanding of the most important aspect of any portfolio – the client! Finology is the unique mix of behavioural finance (“fin”) and investor psychology (“ology”) as it relates to understanding the investor mindset and giving investment advice. It focuses on identifying our own and our clients’ investing biases, beliefs and behaviours and the investment implications, as a means to a better end for clients.

A disciplined, scenarios-based approach to determining your views on the outlook for markets and then the asset allocation implications is a vital means to the end – building portfolios capable of achieving client goals out into the future. This hypothetical Investment Committee meeting picks up from the Economists Roundtable earlier in the day. First, an Asset Class Expert Panel debates the three forward-looking economic and market scenarios presented by the Economists Roundtable. The Investment Committee (Strategies Conference 2021 delegates) then vote to determine which of the three scenarios is most likely. Finally, our asset allocation consultants explain the asset allocation implications of each scenario.

Active long biased, long short equity is optimal for meeting client goals. It combines equity market beta with absolute return thinking, stock picking skill, and flexible exposure. Market neutral investors forgo desirable long-term beta; long only investors forgo flexibility; behavioural biases risk passive investors panicking in bear markets and locking in losses. Investors should view long biased, long short equity as a core solution, dedicating a meaningful slice of portfolios to this strategy, rather than being constrained by traditional equity/debt buckets. The long-term alignment of the strategy (“means”) with client goals (“end”) is demonstrable and paramount.

The UN Sustainable Development Goals (SDGs) are 17 objectives for promoting ecological sustainability, social well-being, and economic development, providing governments, companies, and investors with a global blueprint to sustainable investing. For fund managers, investing will no longer be just about increasing financial value. The fund manager of tomorrow understands that the real-world impact of investments to society and the environment is equally important to generating alpha. Integrating SDGs in the investment process provide a means to understanding the real-world impact of companies. When building sustainable portfolios, investors should consider the real-world impact of their investments and build portfolios aligned with the SDGs as a means to building clients' wealth, as well as improving well-being. Aligning investments with the SDGs justifies the means.

There are now a plethora of funds that aim to account for environmental, social and governance issues based on different philosophies and processes. Passive screening and divestment approaches are inefficient ways of bringing about real change. To achieve the ultimate end - the preservation of our planet - practitioners should instead use active, fundamental strategies, capable of identifying companies that are helping the world adapt to, or mitigate, climate change. The top-line revenues of such portfolios will handsomely outperform GDP in the years ahead.

Australia faces significant challenges ahead - including navigating the health and economic impacts of Covid, responding to emerging issues around the future of work and new technologies, preparing for an increasingly risky geo-political environment, and addressing longstanding challenges such as climate change and reconciliation with Indigenous Australians. Addressing these requires leadership of a quality that enables society to cohere in the face of pressures that would otherwise create divisions. Trust will be at a premium - in turn, this will depend on the quality of ethical decision making by individuals, groups and organisations. A more ethical Australia would achieve an economic improvement about half as big as the nation’s economic reform priority list outlined by the Productivity Commission in 2017 (which would lift the economy by some $80 billion over time). But improving ethics cannot be achieved with a single initiative; it requires improvements in five key areas. With the individual, business and economic benefits on offer from a more ethical Australia, the business case for change is a sound one. In the face of the challenges ahead for Australia, strengthening ethics is simply a must for a better future.

Established in 2002, Strategies Conference has earned a reputation as THE portfolio construction strategies conference of the year. The program is designed and curated by our specialist, experienced and independent team and features an exceptional Faculty of 50+ leading investment thinkers - portfolio managers, CIOs, senior investment analysts, investment strategists, economists, independent consultants and practitioners - from around the world. Each offers his/her best, high conviction ideas around contemporary and emerging portfolio constructions issues and strategies, in the context of the program theme, “The end justifies the means!”.

Established in 2002, Strategies Conference has earned a reputation as THE portfolio construction strategies conference of the year. The program is designed and curated by our specialist, experienced and independent team and features an exceptional Faculty of 50+ leading investment thinkers - portfolio managers, CIOs, senior investment analysts, investment strategists, economists, independent consultants and practitioners - from around the world. Each offers his/her best, high conviction ideas around contemporary and emerging portfolio constructions issues and strategies, in the context of the program theme, “The end justifies the means!”.

Established in 2002, Strategies Conference has earned a reputation as THE portfolio construction strategies conference of the year. The program is designed and curated by our specialist, experienced and independent team and features an exceptional Faculty of 50+ leading investment thinkers - portfolio managers, CIOs, senior investment analysts, investment strategists, economists, independent consultants and practitioners - from around the world. Each offers his/her best, high conviction ideas around contemporary and emerging portfolio constructions issues and strategies, in the context of the program theme, “The end justifies the means!”.

Established in 2002, Strategies Conference has earned a reputation as THE portfolio construction strategies conference of the year. The program is designed and curated by our specialist, experienced and independent team and features an exceptional Faculty of 50+ leading investment thinkers - portfolio managers, CIOs, senior investment analysts, investment strategists, economists, independent consultants and practitioners - from around the world. Each offers his/her best, high conviction ideas around contemporary and emerging portfolio constructions issues and strategies, in the context of the program theme, “The end justifies the means!”.

Established in 2002, Strategies Conference has earned a reputation as THE portfolio construction strategies conference of the year. The program is designed and curated by our specialist, experienced and independent team and features an exceptional Faculty of 50+ leading investment thinkers - portfolio managers, CIOs, senior investment analysts, investment strategists, economists, independent consultants and practitioners - from around the world. Each offers his/her best, high conviction ideas around contemporary and emerging portfolio constructions issues and strategies, in the context of the program theme, “The end justifies the means!”.

Established in 2002, Strategies Conference has earned a reputation as THE portfolio construction strategies conference of the year. The program is designed and curated by our specialist, experienced and independent team and features an exceptional Faculty of 50+ leading investment thinkers - portfolio managers, CIOs, senior investment analysts, investment strategists, economists, independent consultants and practitioners - from around the world. Each offers his/her best, high conviction ideas around contemporary and emerging portfolio constructions issues and strategies, in the context of the program theme, “The end justifies the means!”.

Established in 2002, Strategies Conference is THE portfolio construction strategies conference of the year. Presented each August, the program features 50+ carefully selected leading investment thinkers who will challenge and refresh your portfolio construction thinking by debating contemporary and emerging portfolio construction strategies, for you to consider applying in practice to build better quality portfolios.

Established in 2002, Strategies Conference is THE portfolio construction strategies conference of the year. Presented each August, the program features 40+ carefully selected leading investment thinkers who will challenge and refresh your portfolio construction thinking by debating contemporary and emerging portfolio construction strategies, for you to consider applying in practice to build better quality portfolios.

With several catalysts impacting on the Australian advice landscape, we are seeing a resurgence back to centrally developed investment portfolio construction solutions - but the approach differs to history.

When constructing investment portfolios, one of the first questions is the objective - generally, the desired return. But ES investors have a dual investment objective. So which takes precedence?

Emotions generated in the media by way of the words used in turn influence investors decisions, providing the foundation for a highly profitable investment process.

farrelly's Dynamic Asset Allocation Handbook (Jun 2021) has been assessed and accredited by Portfolio Construction Forum for Continuing Education (CE/CPD) hours. Those who attend online on-demand must complete a CE Quiz to receive CE/CPD accreditation.

Target date funds first became popular as a MySuper option. Leaving aside whether target date funds are a good idea in the first place, what these two papers highlight is a lack of thought in their design.

While the retirement income system is designed to accommodate all individuals, the real test is its adequacy for the poor. These two papers address this issue for both Australia and the US.

With cash currently offering virtually no return, the question arises as to whether there is any reason to hold it as an investment.

In a low return environment, investors just have to accept more risk in order to meet their goals? On the face of it, this seems self evident and may even have a large element of truth. But, for many, it may be a very, very poor strategy.

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...

Our Markets Summit program kicks off with a video retrospective of the key events of the prior year...

The herculean tug of war between stronger economic growth and higher bond yields will be the defining battleground of 2021 and will be accompanied by violent and rapid-fire recalibrations of relative valuations.

Our diverse panel debated which of the high-conviction propositions they heard at Markets Summit 2021 resonated most strongly, which they disagreed with most - and the portfolio construction implications.

The energy transition has the potential to be as transformative for the world economy and geopolitical landscape as the digital revolution has been since the 1980s.

Rather than accepting lower returns for liquidity, investors should go back to the drawing board and re-assess their need for daily liquidity.

Often underrepresented in investor portfolios due to concerns around liquidity, private equity investing with a truly hands-on approach allows active investors to maximise their capital growth potential.

The 60/40 balanced portfolio needs to be “stretched” or redesigned, to mitigate the impact of low yields on overall portfolio risk and return. Investors need to make their equity allocation work harder and consider new diversifiers.

Covid-accelerated trends - including digitalisation, geopolitical tension and the impact of ESG on the cost of capital - are structural and divergence within equity markets could increase.

With the official cash rate near zero, it's time to head back to the drawing board to find a more consistent source of income. Private debt provides a compelling alternative source of income in a portfolio.

The consensus view that US equities are in a bubble is overblown. Go back to the drawing board when it comes to your views on US valuations - because this time IS different.

Pent up consumer demand, fiscal stimulus and accommodative monetary policy set the stage for a sharp global recovery. It is back to the drawing board in a high growth environment.

It's time to construct portfolios with investment strategies designed to advance humankind towards a global sustainable economy, a just society, and a better world.

The illiquidity premium offers strong value over the cyclical horizon. A combination of interest rate, credit and illiquidity risks provide diversified fixed income exposures with attractive return potential.

The Covid-19 pandemic has accelerated profound shifts in how economies and societies operate and is transforming macroeconomic policy, geopolitics and sustainability.

During 2020, G-REITs experienced a once in a generation demand shock. With new building supply and REIT balance sheets in good shape, G-REITs are well positioned as economies reopen and demand returns. Now is the time for G-REITs.

Structural factors will ensure that the cash rate cannot rise over the medium term, resulting in negligible cash returns. A core fixed income exposure consisting of Australian government bonds will outperform cash over the long term.

Scale-as-a-service cloud computing platforms allow companies - both large and small - to get their IT infrastructure up and running in minutes. Over the next decade, this will have profound implications for the global economy.

Jonathan Pain, Author of The Pain Report, is a regular key note presenter at Portfolio Construction Forum's professional development programs. Over the years, he has debuted new investment theses and challenged delegates about how to build better quality investor portfolios...

Established in 2009, Portfolio Construction Forum Markets Summit is THE investment markets scene setter of the year. The geopolitical, macroeconomic and corporate outlook remains unclear, yet stock markets continue to climb this wall of worry. It is time to pause, reflect and go back to the drawing board! Markets Summit will help you better understand the key drivers of and outlook for the markets (geopolitical, economic and asset class), and the opportunities and risks ahead, on a three- to five-year view, to aid your search for return and to help you build better quality investor portfolios.

The Investment Management Analyst Certificate (IMAC) advances investment management analyst knowledge, skill and expertise in a definitive set of competencies necessary for building and/or advising on quality multi-manager portfolios. It is both a structured post-graduate certificate course in its own right, and the Australian-based Registered Education Program for the global Certified Investment Management Analyst® (CIMA®) program.

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 portfolios, whether practitioner or advocate.

This lecture instructs farrelly's subscribers on on the principles of managing currency in portfolios.

This lecture instructs farrelly's subscribers on the foundations of asset allocation in three parts - key principles of asset allocation, optimisation and how to define an asset class.