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Six Big Trends in Portfolio Management

  • Posted by: ,  Chief Executive
  • 16 January 2018
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Six Ongoing Trends in Portfolio Management

Take off your fitness tracker, grab a craft beer out of your Yeti cooler, and ask Alexa to put your favorite tunes on - it's time to talk trends.

These 19 papers represent six of the biggest, broadest trends within the portfolio management industry over the past years.
Savvy Investor
THE GROWTH OF FACTOR INVESTING

Invesco Factor Investing Insights: Introduction and Research
(For compliance reasons, this paper is only accessible in certain geographies)
Investors seeking precise and systematic solutions to achieve their investment objectives are increasingly adopting a risk factor methodology.  Here are a series of papers written by several Invesco experts on factor investing approaches.

For Style Factors, One Size Does Not Fit All (Axioma)
Investors may need to vary between using local and regional models, if using factors for alpha generation. 'Alpha factor users' should not panic when returns to factors go negative, nor should they expect the good times to last forever.

Multi-factor indexes: the power of tilting (FTSE Russell)
When combining factors into a single index, FTSE Russell favors the 'integrated' bottom-up approach of including stocks with multiple factor exposures over the top-down 'mixed composite' approach of individual factors.

THE ADOPTION OF EXCHANGE-TRADED FUNDS

Active Strategies, Indexing and the Rise of ETFs (Greenwich Associates/BlackRock)
(For compliance reasons, this paper is only accessible in the USA)
This report documents a recent study of the ETF market, examining how a transformation in the long-held distinction between indexed and active approaches is leading to growth in the ETFs market.

Institutional guide to Bond ETFs (BlackRock)
(For compliance reasons, this paper is only accessible in the USA)
Available as a digital guide or pdf, BlackRock presents trends in the adoption of institutional bond ETFs, the benefits of bond ETFs, common applications, case studies, analytical tools, and other resources.

How Active Managers are using Factor Strategies (BlackRock)
(For compliance reasons, this paper is only accessible in the USA)
This paper examines factor investing through the lens of 3 case studies on the potential to increase returns, reduce risk, and add diversification by including factors in existing strategies.

THE INTEGRATION OF ESG FACTORS

How ESG Affects Equity Valuation, Risk, and Performance (MSCI)
Bearing special attention to the distinction between correlation and causality, this paper focuses on understanding how ESG characteristics have led to financially significant effects within corporations.

ESG Investing and Portfolio Integration (William Blair)
William Blair supplies a snapshot of the sustainable investment environment, investor adoption trends, implementation methods, and other significant sustainable investment themes.

ESG Institutional Investor Survey: Performing for the Future (SSGA)
ESG criteria are increasingly seen as capable of improving investment returns. In this survey, SSGA examines the challenges of wider ESG adoption and describes the pathways that are facilitating ESG integration into the investment process.

The Role of the Corporation in Society (Eaton Vance Institutional)
(For compliance reasons, this paper is only accessible in Canada and the USA)
This paper examines the ways in which sustainable business practices can impact corporate valuations, as well as the valuation premium that sustainability leaders receive in fixed income and in equity markets.

THE RECOGNITION OF SECULAR TRENDS

The rationale for Trends Investing (Robeco)
In this paper, we set out our trends investing philosophy and aim to lay the foundation of a conceptual and analytical framework for trends investing that moves beyond mere story-telling.

Megatrends: Investment Institutions Trend Index 2017 (PRI/Willis Towers Watson)
Five megatrends are identified and analysed: Environmental challenges, Society and demographics, Globalisation and connectivity, Emerging economy growth and dynamism, and Technological advances.

Demographic dividends, corporate challenges (LGIM)
(For compliance reasons, this paper is not accessible in Canada or the USA)
Post-WWII, human life expectancy has dramatically increased, paying societal dividends, yet also providing certain challenges for corporate entities impacted by these changes.

THE INCREASE IN INDEX INVESTING

The Rise of Indices Is Changing the Face of Investing (S&P Dow Jones Indices)
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.

How the Active vs. Passive Debate Misses the Point (Swan Global Investments)
Recently, significant amounts of capital has flowed from active products into passive products.  The authors take a different approach to discussing "active vs passive" and explain why the debate misses the point.

Vanguard's guide to Core-Satellite investing, 2017
In this paper, Vanguard explains how the core-satellite concept is a portfolio philosophy that combines the best of portfolio theory and a real-world market-tested approach, therefore offering potential for outperformance.

THE EMERGENCE OF TECHNOLOGICAL INNOVATION

Artificial Intelligence: It's Not the Future, It's Now (Capital Group)
Artificial Intelligence, having suffered through decades of disappointment, is now ready to fuel the coming waves of innovation, potentially providing for both corporate and investment-related opportunities.

Real use cases for Blockchain and DLT in the Asset Management sector (KPMG)
KPMG offers real and practical examples of how Blockchain and DLT work in the asset management industry, as well as other potential areas to disrupt status quo investment management processes.

Technology Transforms the Financial Landscape (BlackRock)
Investors must pay more attention to secular forces such as technological innovation and demographic trends that are transforming the economic and financial landscape.

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