A selection of the best research from August 2016
Savvy Investor is the world's leading knowledge network for institutional investors, with over 13,700 members and a research library containing 12,000 white papers.
Here is our list of the 16 most popular and trending white papers from August 2016. Subjects covered include blockchain, asset management compensation, the coming pensions crisis, the market outlook, trends in the asset management industry, private equity secondaries, stock-bond correlations, and many others.
How will Blockchain impact the Financial Industry? (Robeco, 2016)
There is growing agreement that Blockchain technology, though overhyped, is here to stay. This excellent report from Robeco explains the distributed ledger technology, transaction flows and the eco-system. It then examines the ways in which it might transform the asset management industry in the future.
The Rise of Indices Is Changing the Face of Investing (S&P Dow Jones Indices)
This report by S&P Dow Jones takes an in-depth look at how indices are changing the face of investing. Specifically, it examines whether passive investing can grow too large and what the possible implications of this are for active management.
Asset Management Compensation Trends (Johnson Associates, Aug 2016)
Compensation levels within the asset management industry are expected to decrease modestly over the coming year. This paper by Johnson Associates examines some of the key drivers causing this change, for example: investment activity; interest rates; and ongoing uncertainty around the global economy.
The Coming Pensions Crisis (Citi, 2016)
The retirement dream for many is to retire early enough to enjoy the fruits of their labours. The reality however is that for many there isn't enough money in the bank to last the entirety of their retirement. This paper by Citi looks at the scope of the problem both on the private and the public side. The author examines the issue globally then makes some recommendations to help keep the global pensions system afloat.
Capital Market Assumptions: Five-Year Outlook 2016 (Northern Trust)
Northern Trust provides five-year return forecasts for a variety of asset classes including fixed income, equities, natural resources, global real estate, listed infrastructure, hedge funds and private equity. The document also highlights six "themes to watch" for the years ahead, with the primary theme being "market cycles in a cycle-less economy".
Why Are Stocks Near All-Time Highs and Yields Near All-Time Lows? (Fidelity Investments, Aug 2016)
This paper by Fidelity Investments seeks to better understand why stocks are at all-time highs and yield near all-time lows. The authors point to low interest rates, global growth and inflation trends.
Introductory Guide to Investing in Private Equity Secondaries (Capital Dynamics, 2016)
This 23-page paper has been authored by Capital Dynamics. In it, the authors take the view that private equity secondaries present a fantastic risk-adjusted return profile, providing attractive long-term returns while still displaying defensive attributes.
Cost-benefit analysis of helicopter money (Richard Koo of Nomura, Aug 2016)
In a personal view, respected Nomura economist Richard Koo examines four different versions of so-called "helicopter money" and explores the implications of each. He expresses surprise that economic pundits promote unconventional policies such as QE and helicopter money, without considering the eventual need to mop up the liquidity created in the process.
A Century of Stock-Bond Correlations (RBA, 2014)
This paper by the Reserve Bank of Australia presents interesting data on the correlation between government bond yields and equity prices in the United States throughout the 20th century. This correlation between the U.S. and other countries fluctuated throughout this period but tended to be largely negative. Since the late 1990s however, stock-bond yield correlations have been largely positive and rose overwhelmingly during the 2008 financial crisis.
Hedge Fund-ing the Pension Deficit (Cambridge Associates, 2016)
This research note by Cambridge Associates examines the role hedge funds can play in pension investment portfolios and why in the current environment particularly, they may be additive to a pension risk management strategy. The authors discuss key areas for consideration as plan sponsors contemplate implementing a hedge fund allocation.
Scientific Beta Low Carbon Multi-Beta Multi-Strategy Indices (EDHEC, 2016)
The authors of this 50-page paper introduce ERI Scientific Beta's low carbon indices. The indices rely on the principle of reducing an index's carbon footprint by using a mild exclusion of high carbon stocks, while maintaining exposure to rewarded risk factors and an appropriate level of diversification. The existing argument for low carbon investments, in contrast, relies on the profitability of low carbon stocks or the existence of a low carbon premium, a concept this paper brings into question.
Exploring ESG: A Practitioner's Perspective (BlackRock, 2016)
This paper by BlackRock provides important insights into ESG matters from the viewpoint of a fiduciary investor acting on asset owners' behalf. The authors define three key areas in which fund managers integrate ESG factors. They also describe the current ESG disclosure initiatives landscape across regulatory bodies and organizations. They conclude with recommendations for policymakers.