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The ASX200 is too concentrated - reduce weights!
Simply observing the concentration inherent in the index and reducing Australian Equity weights is throwing the proverbial baby out with the bathwater. It’s nuts and you can clearly see it’s nuts.
| 18-09-17 | More -
farrelly's Investment Strategy (NZ)
Welcome to the farrelly's Dynamic Asset Allocation NZ subscriber-only area...
11-09-17 | More -
farrelly's Investment Strategy (Australia)
Welcome to the farrelly's Dynamic Asset Allocation subscriber-only area.
11-09-17 | More -
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...
11-09-17 | More -
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...
11-09-17 | More -
Beating the world’s best investors
Where can practitioners take on the world’s best investors and win? Actually, in quite a lot of places.
| 28-08-17 | More -
Exploiting anomalies is vital for higher long-term returns
To outperform the market you have to invest in something different. Investment returns are best captured through the exploitation of anomalies – the truly different mispriced opportunities.
| 24-08-17 | 0.50 CE | More -
There are better alternatives to time-based rebalancing
Time-based rebalancing is inefficient. Research suggests that tolerance band rebalancing strategies minimise trading and boost portfolio returns. Such threshold approaches may be used in both the portfolio accumulation and decumulation phase, and act as a pre-commitment device for clients.
| 24-08-17 | 1.00 CE | More -
Retirement spending and biological age
There is a growing body of evidence suggesting that chronological (C) age is dominated by biological (B) age as a better proxy for longevity risk. Practitioners must consider both ages when building portfolios and structuring retirement spending strategies.
| 23-08-17 | 1.00 CE | More -
Backgrounder: Portfolio rebalancing strategies
Researchers propose a range of improvements to traditional time-based rebalancing, including threshold and cash flow strategies, designed to increase effectiveness and efficiency.
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Investors should hedge their overall financial risk
People often consider risks in isolation, and overpay for protection as a result. Rather than hedging against specific risks, investors should think like a game theorist.
| 21-08-17 | More -
Backgrounder: The rise of impact investing
As some institutional investors build internal impact investing capabilities, the inclusion of impact investments in portfolios may be on the cusp of becoming mainstream.
| 21-08-17 | More -
2011 Conference: CIF - Modern portfolio construction (Michael Kitces)
Portfolio construction practitioners have traditionally split into two camps - passive indexers, or active investors aiming to either pick winning companies or fund managers who can identify such companies. In this Critical Issues Forum session at the 2011 Conference, US-based researcher Michael Kitces provided a new and robust framework to understand the opportunities for value creation in portfolios...
| 20-08-17 | More -
It all adds up... well, sometimes it doesn't
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?
| 19-08-17 | More -
The value of investing in a diversified pool of fat left tailed strategies
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.
| 18-08-17 | More -
Shifting global trade patterns bring new opportunities
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.
| 18-08-17 | More -
Using alternative investments to address pre- and post-retirement issues
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.
| 18-08-17 | More -
E + S + G factors are fundamental to better portfolio outcomes
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.
| 18-08-17 | More -
Asset managers need to build better factors
Factor indices are a smart way to capture equity market beta. However, investors use factors in pursuit of broader aims.
| 17-08-17 | More -
Research Review: Financial ruin and biological age
Two recent research studies shed light on retirement income planning. The first proposes a two-step framework that avoids the pitfalls of shortfall probabilities. The second finds that people need to use both their biological age and chronological age to decide spending rates.
| 15-08-17 | 1.00 CE | More -
A sector that cannot be ignored
Having grown strongly over the last 20 years, a new study shows infrastructure investment will continue over the next two decades. It is a secular trend with long-term opportunities.
| 11-08-17 | More -
Choosing discount rates for retirement planning strategies
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.
| 08-08-17 | 1.00 CE | More -
2011 Conference: DDF - A scenarios approach to asset allocation (Susan Gosling)
This Due Diligence Forum Research Paper, presented at the 2011 PortfolioConstruction Forum Conference, proposes an asset allocation approach that makes more complete use of information available about the future, forcing consideration of different time frames, alternate outcomes, and tail risk...
| 01-08-17 | More -
Buying happiness and satisfaction with greater cash reserves
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.
| 29-06-17 | More -
Masterclass NZ 2017 - Resources
Masterclass NZ is a post-graduate extension program focused on contemporary issues that are fundamental to building better quality portfolios. The one-day program is comprised of five research-based, active learning sessions:
16-06-17 | More -
The upside of less downside
When equity markets fall, the financial and emotional impacts can be lasting. By focusing on reducing downside, investors can have a smoother ride and still achieve the returns they seek.
| 30-05-17 | More -
Three strategies to manage retirement income uncertainty
The danger that sequence of return risk can devastate a retirement portfolio is both increasingly recognised and frequently misunderstood. Three research-driven strategies can help manage it.
| 22-05-17 | 1.00 CE | More -
Impact investing in the context of a diversified portfolio
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.
| 03-05-17 | 0.50 CE | More -
Issues in long-term investing - part 1
Short-term thinking in finance is nothing new. The benefits of long-term investing extend beyond just being able to invest in illiquid assets. Patience can pay its own dividend.
| 10-04-17 | 1.00 CE | More -
Research Review: Only in Scandinavia?
Do professional investors do better when investing on their own behalf? What is the relationship between the remuneration of professional investors and performance? What role to gender and age play in the use of ETFs?
| 10-04-17 | More -
A client's life is a mix of stocks & bonds
It is time to properly account for risk characteristics of client’s most valuable asset - their human capital. This isn’t easy to implement and places practitioners in a difficult situation...
| 24-03-17 | 1.00 CE | More -
Behavioral biases & hierarchy of retirement needs
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.
| 23-03-17 | More -
Four fundamental portfolio construction decisions
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.
| 06-03-17 | More -
The wrong side of maybe fallacy
Monte Carlo analysis is commonly used to evaluate retirement spending plans - but our cognitive and behavioural biases may interfere with proper interpretation of the results.
| 28-02-17 | More -
Low interest rates matter. So do imputation credits
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...
| 27-02-17 | More -
Finology Summit 2017 - The winds of change - key takeouts
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.
23-02-17 | More -
Markets Summit 2017 - The winds of change - key takeouts
Markets Summit 2017 delivered 20+ high conviction ideas on how the winds of change are affecting the outlook for economies and asset classes - and the implications for portfolios. Here are our key takeouts.
17-02-17 | More -
Focus investors on goals with a retirement spending policy
A formal, written spending policy can help investors focus on what's really important - will they meet their goals?
| 15-02-17 | 0.25 CE | More -
The winds have changed
The tectonic plates of the political and economic landscape are rupturing. Brace yourselves for a wild and entertaining ride...
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Winds have changed
The tectonic plates of the political and economic landscape are rupturing. Brace yourselves for a wild and entertaining ride...
| 14-02-17 | 0.25 CE | More -
Now is the time to accumulate duration
As 2017 began, there was (once again) an air of optimism that interest rates are about to return to normal. This optimism dismisses the significant structural headwinds that are prevalent.
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There are 4 fundamental decisions to make now for portfolios
When positioning a multi-asset, portfolio for the medium-term, there are four fundamental decisions we must make now. They are, in some cases, interdependent.
| 14-02-17 | 0.25 CE | More -
The hunt for yield is over
Money velocity is accelerating in the US and UK, as commercial banks rediscover their appetite for risk and the two economies continue to normalise. The shift has significant implications for asset allocators.
| 14-02-17 | 2 comments | More -
Don't confuse the winds of change with "hot air"
The biggest portfolio risk in 2017 will be over confidence in assigning scenario probabilities. Don't confuse the winds of change with "hot air" when it comes to portfolio construction.
| 14-02-17 | 0.25 CE | More -
Panel: The winds of change
Partners Group's Charles Dallara, Lazard's Ron Temple, and Magellan's Hamish Douglass debate the winds of change sweeping through the global economy and equity markets.
| 14-02-17 | 0.25 CE | More -
Don't confuse winds of change with "hot air"
The biggest portfolio risk in 2017 will be over confidence in assigning scenario probabilities. Don't confuse the winds of change with "hot air" when it comes to portfolio construction.
| 14-02-17 | 0.25 CE | More -
Trump the game changer - the only certainty now is uncertainty
2017 will present many risks and opportunities, as the winds of change sweep through the global economy and markets. Geopolitics will dominate. The only certainty for 2017 is uncertainty.
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Backgrounder: 5 Megatrends driving portfolio construction
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.
| 13-02-17 | More -
Research Roundtable International 2016 - key takeouts
Put 10 senior Australian fund analysts on an eight-day CE program to the west coast of the USA? Inevitably, the group debated their views on many issues.
| 02-02-17 | 2 comments | More -
A two-dimensional risk tolerance assessment process
Beware using risk tolerance assessment tools that blend risk tolerance and risk capacity into a single result. The two need to be measured separately.
| 30-01-17 | 2 comments | More -
Does political analysis matter when investing?
Should we just keep our heads down and treat political events as nothing more than noise? 2017 is going to be a year when politics does matter. In fact, it always has.
| 28-01-17 | More -
Finding the optimal portfolio rebalancing frequency
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.
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The failure to understand rebalancing
We've been drilled that rebalancing in portfolios results in improved returns and/or reduced risk. But the benefits of rebalancing are far smaller than we’ve been led to believe.
| 02-01-17 | 4 comments | More -
Re-balancing usually reduces returns
While rebalancing may be helpful as a risk management strategy, it may actually reduce long-term returns. But that isn't a reason to avoid it.