Mercer, the investment consulting firm, tackles three unusual asset classes in “Introducing emerging alternative opportunities.“
According to the article, institutional investors are considering investing in these three asset classes to diversify their portfolios or achieve more stable returns:
The recent decline in commissions generated by buy-side equity trading will cut funding available for independent and sell-side investment research, according to “Integrity’s Outlook for Independent Research.” Michael Mayhew of Integrity Research Associates says that commissions are expected to fall by 40% next year.
However, there is a silver lining to this dark cloud. Integrity says, “However, once the dust settles (in late 2009 or early 2010) we anticipate that the market for investment research, and particularly non-traditional independent research, is likely to improve markedly.” Why? Because buy-side research staffs will have shrunk and the supply of good research will be tighter.
Interested in more news like this? Visit Integrity ResearchWatch or subscribe by email or RSS feed.
There’s no mass exodus out of hedge funds, according to this clip from CNBC.com.
Indeed, hedge funds with global macro, managed futures, and equity market neutral strategies are delivering good returns, according to Ferenc Sanderson of Lipper.
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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2008 by Susan B. Weiner All rights reserved
What do a turkey being fattened up for Thanksgiving and Federal Reserve Board Chairman Ben Bernanke have in common?
According to Nassim Nicholas Taleb, author of the best-selling The Black Swan: The Impact of the Highly Improbable, both mistakenly act as if the past predicts the future.
The turkey, getting fed for 1,000 days, expected only food from the farmer until the ax fell just prior to the holiday. Bernanke, author of “The Great Moderation,” mistook a lack of volatility for a lack of risk.
They both failed to consider the potential for a “black swan,” the focus of Taleb’s speech on “How to Live in a World of Black Swans,” delivered to the Financial Planning Association’s annual conference in Boston on October 4. Taleb reviewed some of the concepts discussed in his book, and then concluded with a call for investing in robust “barbell” portfolios.
Continue reading my article, “How to Live in a World of Black Swans.”
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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2008 by Susan B. Weiner All rights reserved
Next week I’ll publish some insights from recruiters on the hiring environment for folks in the investment management industry.
Meanwhile, here are some links for job hunters from Charlie O’Neill of MutualFundCareers.com:
Related post: Who’s hiring CFA charterholders?
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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2008 by Susan B. Weiner All rights reserved
For a reassuring take on financial markets’ resilience and the future of diversified portfolios, watch “Is It Different This Time?” by Weston Wellington of Dimensional Fund Advisors.
As an editor, I was impressed by how Wellington used images of magazine and newspaper headlines to convey how wrong alarmists have been on many occasions.
Thank you, Russell Wild, for pointing out this presentation.
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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2008 by Susan B. Weiner All rights reserved
Glenda Kemple knows precisely why she outsources portfolio construction. “You add value because you understand your client’s total financial picture,” says Kemple, CPA, CFP®, of Kemple Capital in Dallas, Texas. That picture includes cash management, tax planning, retirement planning, estate planning, education planning, and risk management, in addition to investment management. “We want clients focused on all of those dynamics, not just the portfolio.”
Those who outsource portfolio construction as Kemple does passionately agree. They believe it saves them time and empowers them to better serve their clients’ overall financial planning needs, while tapping high-quality investment resources at a reasonable cost. They also believe that outsourcing makes them more competitive, helping them snare bigger, more sophisticated clients—and to win a bigger percentage of their assets.
Non-outsourcers are equally passionate about keeping portfolio construction in-house, arguing that they save their clients fees and provide better performance, and have a better handle on their clients’ portfolios, as well as getting great personal satisfaction out of the portfolio construction process.
Continue reading my article in the Journal of Financial Planning (FPA membership required).
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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2008 by Susan B. Weiner All rights reserved
Dealing with market volatility is a full-time job.
For us. Not you.
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The headline copied above works. It got me to pick up a brochure about the Fidelity Portfolio Advisory Service.
Why does it work?
First, it raises the reader’s anxiety with “dealing with market volatility is a full-time job.” But that isn’t enough. The brochure quickly offers a solution: Fidelity will handle volatility for you.
Consider trying to apply this model to your written communications.
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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2008 by Susan B. Weiner All rights reserved
Marketers of investment strategies marketed using performance composites will have to learn new recommendations and rules once GIPS 2010 goes into effect. If you’re a reader of marketing materials for separate accounts, you will find new information to digest.
GIPS is short for Global Investment Performance Standards. The next draft of GIPS standards will be issued for public comment in early 2009, with new standards to be issued in early 2010 and to become effective on January 1, 2011, according to a presentation on “GIPS Update: What to Expect in 2010” by Sunette Mulder, chair of the GIPS Executive Committee and Investment Manager Subcommittee, and Karyn Vincent, chair of the GIPS Interpretations Subcommittee. They spoke at the CFA Institute’s GIPS Standards Annual Conference on Sept. 25.
I nodded my head when Vincent said that common practice in the U.S. is to show 10 years of investment composite performance and to drop off the eleventh year once an additional year of performance is completed. I remember salespeople gleefully anticipating when a bad year would drop off the bar graph.
However, the draft of GIPS 2010 will recommend that firms show more than 10 years of history. That was just one of many points made by Vincent and Mulder.
Another change that will impact marketers: the composite description must be expanded to include “enough information to understand all of the key characteristics, including risks, of the composite strategy.” Apparently it was felt that firms don’t adequately discuss risks.
Speaking of risk, another innovation is to require disclosure of a risk measure such as standard deviation for the composite and the benchmark for the most recent three-year period. If standard deviation isn’t the best risk statistic, you may show additional statistics.
If you don’t like what you’re hearing–or if you think some of these ideas should definitely get implemented–remember you’ll have an opportunity to give feedback on the draft of GIPS 2010. You can keep up at the GIPS Standards website.
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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2008 by Susan B. Weiner All rights reserved
Better client reporting on investments is on the horizon, according to “The Future of Performance Measurement,” a Sept. 25 presentation by Stefan Illmer, head of client reporting for Credit Suisse, at the CFA Institute’s GIPS Standards Annual Conference in Boston.
There is “increasing pressure to provide analytics…from the client’s point of view” in addition to providing them for the portfolio manager. That translates into:
Illmer also foresees more reporting for clients’ total portfolios, incorporating clients’ externally held assets such as real estate, private equity, assets held with other custodians, and advisory accounts.
An audience member asked how firms can aggregate client portfolios for look-through given the 90-day delay in mutual funds reporting their holdings. Illmer replied that the data exists because it is used for daily net asset value calculations. He believes that pressure from clients may eventually win the release of this data.
For a related post, see “Financial crisis will change client reporting, according to Credit Suisse executive.”
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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2008 by Susan B. Weiner All rights reserved