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Uncategorised posts

Let’s talk about underfunding

Even using the assets of the pension plan was not enough of a leg-up to save the city of Detroit from bankruptcy. As the last words in the song Put your hands up for Detroit by Fedde Le Grand say, it is system shutdown. The fiscal demise of this city may be a lesson for […]
Asset Allocation

Assessing reality in US public funds

Distinct regulation of United States public pension funds that links the liability discount rate to expected return on assets, rather than to the riskiness of their promised benefits, sets them apart – in a bad way. US public funds have underperformed other pension fund cohorts because of higher allocations to risky assets. Arguably, regulation is […]
Uncategorised posts

Disparity in policy portfolio risk profiles

A policy portfolio is a poor reflection of investor preferences, argued Peter Bernstein. This philosophical question has now been empirically tested by MIT’s Mark Kritzman, who shows the inter-temporal disparity of a policy portfolio’s risk profile. He suggests a simple framework for addressing this deficiency. Kritzman encourages investors to replace rigid policy portfolios with flexible investment policies. […]
Emerging Markets

Active management and ideal weighting in emerging markets

From a strategic asset allocation point of view, AustralianSuper is one of the most aggressive investors in emerging markets, particularly Asia. About a quarter of the $43-billion fund is in international equities, and nearly half of that is in emerging markets. Equities is the vehicle for AustralianSuper’s emerging market exposure because growth remains the reason […]
Emerging Markets

Opening China: a green light for investor action?

The changing nature and openness of emerging market financial systems mean that constant assessment of the environment is necessary. MSCI is currently considering whether to increase the allocation of China’s weight in the emerging market index to include the nation’s A shares. (Concurrently MSCI Korea and MSCI Taiwan Indices remain under review for a potential […]
Sustainability

On a mission to cure capitalism

Al Gore, former US vice president and co-founder with investment banker David Blood, of Generation Investment Management, said sustainable capitalism is not an argument that pension funds should sacrifice value in return for values.
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