Differences in regulation, politics, and transparency between Asian countries are all factors that cannot be captured by passive investing but which represent opportunities for active investors.
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.
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.
With US unemployment running at just 3.8% (equal lowest rate since 1969), the Fed will have to hike rates four times this year, with the risk that bond yields go not just to 3.5% but somewhere well north.
Over-the-top streaming will become the dominant form of media consumption, and Netflix will be the dominant global provider. Near-term valuation multiples may ultimately prove cheap.
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...
Welcome to the farrelly's Dynamic Asset Allocation Australian subscriber only area...
Welcome to the farrelly's Dynamic Asset Allocation NZ subscriber-only area...
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...
Many asset classes - such as real estate and infrastructure - face the same valuation headwinds as equities and bonds. Practitioners should consider using cash as the diversifier for multi-asset portfolios.
Calm returned to global stock markets in May. But investors should not be lulled into a false sense of security. Equities and bonds face considerable headwinds as the Fed continues to tighten.
The consensus view is that the Phillips Curve is dead. To understand it, you must understand the history of the model and the Kiwi who first researched the link between unemployment and wages.
Only by understanding two factors can practitioners mitigate the risk of permanent loss of capital in emerging market companies.
Fears of a US-China trade war contributed to recent stock market volatility. Practitioners must look beyond the market noise and focus on the medium-term outlook.
Genomic medicine will radically change how diseases are diagnosed and treated. Healthcare valuations do not currently reflect the long-term opportunities in the sector.
Around the world, smaller companies are benefitting from robust economic growth, low base rates and balance sheet flexibility. Investors should focus on opportunities in Japan and Europe.
There is now a 50% chance that the US Federal Reserve will hike interest rates more sharply than markets expect, leading to a recession in the next one to two years.
This lecture instructs IMAC candidates on properties of fixed income markets, the investment features and risks of bonds, the application of the time value of money to the valuation of bonds, and the concepts of duration and convexity and their application to bond portfolio management.
This lecture instructs IMAC candidates on the statistics used to describe and analyse the risk and return characteristics of securities and portfolios.
This lecture instructs Investment Management Analyst Course (IMAC) candidates on the fundamental of applied economics with an Australian perspective.
This lecture instructs IMAC candidates on the theoretical and empirical underpinnings of portfolio management, specifically in relation to how portfolios are designed and measured.
When building portfolios, practitioners must consider that inflationary pressures may return and that "beautiful normalisation" may simply not exist.
With unemployment at 30-year lows in many countries, practitioners should consider the possibility that wage pressures may force policymakers to tighten more aggressively, triggering substantial equity market falls.
Against the backdrop of legislated increases in financial adviser education, standards and ethics, finology must be seen as central to the curriculum of what financial advisers learn and how they practice, for professionalism to be complete.
Practitioners demand a trifecta from fund managers - performance, simplicity, connection. But many great investments are contrarian and uncomfortable.
Managed accounts have become increasingly popular with approximately A$40bn in assets. Prepare to ride the managed accounts tsunami or be left in its wake.
“Nobody cares how much you know, until they know how much you care,” cautioned Theodore Roosevelt. This is especially true when risk is involved.
Too much of our communication with end investors is either irrelevant, unintelligible to the average investor - or worse still, both.
While robo-advisors have been the big buzz as replacement humans, they’re not (and data proves it). Technology alone is not enough (otherwise everyone with a FitBit on their wrist would be healthy).
Behavioural biases - substitution, aggregation, and feedback risks, overconfidence, and limited attention and availability bias - distort money managers' perceptions and lead them to take risks they don’t see.
Government incentives may help to encourage downsizing but the decision itself may not be purely financial as recent research reveals.
Trust – the belief that those to whom we are vulnerable are both willing and able to act in our interests – is the no.1 factor in the decision to select and retain an asset manager.
The combination of man and machine - tech-augmented humans or "cyborgs" - can be more effective than either alone, posing the greatest opportunity to human financial advisers in the long run.
The Chinese authorities recognise the potential of blockchain technology and are outpacing the US, in the race to develop an "official" cryptocurrency. If the Chinese experiment succeeds, we may witness the start of a new epoch in monetary policy.
For Australian investors, are international markets still attractive sources of growth? Or is the Australian equity market more attractive? Do Australian sovereign bonds remain an anchor portfolio allocation for well diversified portfolios?
China’s Belt and Road initiative is expected to reshape the global economic landscape. However, the plan is poorly understood. It may generate political "returns" but opportunities for investors will be limited.
To paraphrase Mark Twain, reports of America’s retreat are greatly exaggerated. Even if China can sort out its long-term demographic problems, other big challenges loom.
In 2017, the global economy experienced synchronised acceleration for the first time in a decade. The regime shift now underway will challenge portfolio construction designed for the previous regime.
The diversification benefits of bonds increases in a low yield market, and bonds remain one of the best instruments available to investors looking for liability matching as they approach retirement.
Investors should focus more than ever on uncovering sources of idiosyncratic alpha, rather than relying on momentum or passive beta.
It is doubtful that "safe" exposures (global consumer giants) will earn investors strong returns from this point – shift gears rather to domestic European exposures.
Consensus appears to assume that electric vehicle adoption rates will increase dramatically. This view is misplaced. The impact on the oil price and equity market leadership is not something that investors are positioned for.
The global economy is approaching peak growth and investors should prepare for increasing left tail risks. This may be an opportune time to increase allocation to bonds as an insurance policy.
Structural change and the resulting earnings growth will always outrun interest rates in the long run, so as change continues to accelerate, investors need growth equities in their portfolio.
Data from the larger economies generally support the scenario of synchronised global expansion. The biggest risk to portfolios is strong growth and investors need to position themselves in anticipation of rising rates.
Whether an investor's investment horizon is three to five years, 10 years, or even 30 years, they would benefit from taking a generational perspective to enhance returns.
Historical asset allocation methods will not generate appropriate returns in the period ahead, driving the need to be more dynamic to increase both absolute and risk-adjusted portfolio returns.
Simply holding bonds no longer diversifies an investment portfolio, with genuine risk diversification better achieved by exploiting currently under-priced risk premia in volatility and inflation markets.
Will global synchronised growth drive earnings growth to a higher gear that warrants current elevated valuations? And should the early effects of technological changes influence investment choices now?
Bond yields may rise by up to 90bps a lot faster than the Fed is suggesting. It's time to consider what happens to your portfolio if bond yields change gears.
Technological change is advancing with unprecedented speed and scale. The early effects of these technological changes on growth, labour, policy and trade should influence investment choices now.
The US might have three to five years of additional growth ahead. Global synchronised growth is likely to drive earnings growth to a higher gear that warrants current elevated valuations.
Are we in for a global inflation shock leading to significantly higher bond yields and a recalibration of relative valuations? Are we close to a one-in-a-generation change in the world's monetary order? Should we be switching gear with portfolios?
Global economies and central banks are changing gear. Should you be switching gear with your portfolios? To answer, you need a laser focus on what is important for you.
Every generation or so, things (in the economics world) break. Indeed, the history of the world's international monetary order is a history of change, occurring on average every 40 years. This current system is, therefore, long in the tooth.
A combination of factors is set to generate an unexpected inflationary shock to the financial markets, leading to significantly higher bond yields and a recalibration of relative valuations.
Infrastructure assets have large environmental footprints. Incorporating ESG factors into the infrastructure investment process can improve risk-adjusted returns.
Technological revolutions often spawn financial booms and busts - but the value proposition of blockchain is profound, and the technology has given rise to cryptoassets. Practitioners will increasingly be required to understand them.