Investment Process

The Top 16 Investment White Papers in February 2016

Savvy Investor is a knowledge network for institutional investors and their service providers, providing free access to over 12,000 white papers, covering pension fund issues, investment processes, asset allocation, quant topics, alternative investments, industry issues, investment strategy and much more.

The site launched last year and now counts over 9,000 investment professionals as members.

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Here is our list of the most popular and trending papers from February:

1. A Comprehensive Framework designed for Goals-Based Wealth Management (EDHEC)
This paper develops a framework for the purpose financial advisors. By allowing individual investors to optimally allocate assets to risk categories across all wealth segments and stages of life, the framework achieves financial goals that are personally meaningful.

2. A Framework for Institutional Portfolio Construction (Vanguard)
Typically, institutional investors seek one of four investment goals: LDI, absolute return, total return or principal protection. Generally, they choose from four different investment approaches: static tilts, traditional active management, market-cap exposures and alternative assets. The paper considers which strategies are best for investors building their portfolio.

3. Front Office and Asset Management Salaries 2016 - New Surveys
Our most read surveys cover compensation benchmarks for different positions within UK Front Office and Asset Management, US Asset Management, Canadian CFA Charterholders and Asian/Australian roles.

4. Is the Hedge Fund Heyday Behind Us? (Cambridge Associates)
Are the hedge fund glory days over? Cambridge Associates survey the marketplace and re-examine the arguments for allocating to hedge funds.

5. Survey: Digital Marketing at Asset Management Firms (Kurtosys)
This 2015 Kurtosys survey reveals how marketers at asset management firms are dealing with a rapidly changing world of digitally-savvy investors. It reveals how they rate the effectiveness of different digital marketing channels to achieve their goals.

6. The Excess Returns of 'Quality' Stocks: A Behavioral Anomaly
This paper examines the causes of the quality anomaly, one of the most pertinent and scalable anomalies in today's equity markets. The authors explore two possible explanations for why this source of alpha (or smart beta) persists.

7. A Question for DB Plan Sponsors: To LDI or not to LDI (Vanguard)
This paper briefly compares the experiences of two different DB clients, one who rejected LDI and one who embraced it. The author compares their experiences (and the funded status of their plans) in both rising and falling interest rate environments, and in both strong and weak equity markets.

8. Global Private Equity Report 2016 (Bain & Company)
In this 64-page report, the authors examine progress and trends in the private equity industry over the last year, and their expectations for how the industry will develop in the next ten years.

9. Solvency II and Absolute Return Investing (Standard Life)
The authors of this paper examine the implications the Solvency II "look-through" principle has for calculating solvency capital needs. The principle assesses the individual investments held in a fund and their true risk characteristics. They show how it may change the way various asset classes are viewed by insurers, among other issues.

10. How much can retirees spend? The "virtual annuity" approach (Barton Waring & Laurence Siegel)
The authors propose a "virtual annuity" approach to help determine a retirees' spending rule. They state that every year, a pensioner should only spend the amount a recently purchased annuity would pay out that year - with a buying price that equates to the then-present portfolio value.

11. Global Pension Assets Study 2016 (Willis Towers Watson)
The 2016 Global Pensions Asset Study analyzes the characteristics of pensions provision around the world, considering six medium-term factors, referred to as 'The Faces of Changes', that are becoming increasingly influential on the development of pension funds.

12. Market Macro Myths: Debts, Deficits and Delusions (James Montier)
This paper by GMO’s James Montier focuses on the concept of "sound finance" within the context of debt and deficits in economic policy. Montier believes that budget deficits can be good. He argues that the advocates of "sound finance" are wrong, and seeks to debunk the "myths" they propagate.

13. EPD - A New Measurement of Diversification (Standard Life)
In this 6-page paper, the authors propose a new metric for measuring diversification – the “Effective Portfolio Dimensionality” (EPD). The authors believe EPD to be a unique way to assess the number of independent dimensions of risk in a portfolio, whilst maintaining consistency with standard risk models.

14. The Age of Secular Stagnation (Larry Summers)
Renowned economist Larry Summers recently published this piece in the February issue of Foreign Affairs. The paper explores U.S. government expansionary fiscal policy, considering the extent to which it could get growth back on track and overcome secular stagnation problems.

15. Investment Directions: Year of the Bear? (BlackRock, Feb 2016)
BlackRock sets out their current investment strategy views. This includes their views on US equity factors, their reasons for downgrading both financials and high yield to neutral. The Appendix explains how BlackRock formulates their asset allocation views.

16. The Gordon Gekko Effect: The Financial Industry and the Role of Culture
In this paper, Andrew W. Lo argues that although "culture" is a powerful force in shaping behavioral patterns of both individuals and groups, the attention it receives in the context of financial risk management is comparatively scarce. Lo presents a brief overview of the role "culture" plays, according to economists, sociologists and psychologists. He then presents a framework for examining "culture" within the context of financial institutions and their practices.

 

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