In this research report Watson Wyatt asserts the long-term outlook for emerging economies will impact positively on emerging market investments, but it warns that choice of asset class and implementation route are not obvious. The report suggests exposure to the macroeconomic dynamics of emerging markets will be most readily obtained in emerging market equities, debt and currencies, and discusses how emerging market economies will continue to grow strongly, due to a mix of rising productivity, economic and financial reforms, and favourable demographics. However, it states that institutional investors face significant complexity and potentially high fees when trying to build a portfolio that captures this long-term trend and should also recognise the governance implication of following such a strategy.
Research
GIC, Temasek eye trillions of growth in climate adaptation market
Singapore’s two largest asset owners, GIC and Temasek, see attractive opportunities in climate adaptation solutions – a relatively underfunded area compared to decarbonisation. The former has already made selective adaptation investments and said the opportunity set across public and private debt and equity could increase to $9 trillion by 2050.
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Pension fund performance and costs: small is beautiful
This new paper by Rob Bauer, Martijn Cremers, and Rik Frehen uses the CEM pension fund data set to document the cost structure and performance of a large sample of US pension funds. It finds that small-cap mandates of defined-benefit funds have outperformed their benchmarks by about 3 per cent per year. Concluding that while
Inflation/deflation continuum can plot holes
This paper by RogersCasey’s Ryan Dembinsky and Srivatsa Kilambi demonstrate the “inflation/deflation continuum” is a way of assessing an investment program’s vulnerability to the dual threats, and competing forces, of inflation and deflation. The paper presents a framework whereby investors can plot their existing asset classes and assess where there may be holes. mrec4inarticleinline Sponsored
The beta-alpha ratio will yield more success
Using a “Beta-Alpha Ratio” will yield more success in choosing managers ex-ante, compared to other methodology prevalent in the consulting industry, according to a new paper by Wurts Associates’ director of research, Eric Petroff, and research associate, Curtis Yasutake. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3
Spillover effects of counter-cyclical market regulation
Professor of finance at the EDHEC Business School and member of the EDHEC Risk Institute, Abraham Lioui, looks at the spillover effect that counter-cyclical regulation affecting one part of the market, banning short-selling, has on the broad market. By examining the effect of the ban on short-selling in 2008 on market indices in the US
Study links executives’ pay and behaviour
This research, commissioned by APG (the investment division of ABP, the €208 billion Dutch pension fund), examines the published literature on the link between remuneration and executive behaivour. It was conducted by the London Business School. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3
A quality approach to investing in European equities
This research by T Rowe Price looks at the performance of European stocks over a seven-year period to December 2009 and finds, among other things, that companies with the highest return on equity outperform in times of risk aversion, giving investors some downside protection, but fall out of favour in momentum-driven markets.mrec4inarticleinline Sponsored Content scnative1
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