Family offices. Aligning investment risk and return objectives
|
|
- Blaise King
- 7 years ago
- Views:
Transcription
1 Family offices Aligning investment risk and return objectives
2 Family offices Aligning investment risk and return objectives Background Between July and August of 2012, the Financial Times conducted biannual Family Office Survey with the results published in a report towards the end of Family offices located around the world (but predominantly based in the UK or the US) were invited to express their opinions on many topics such as risk tolerance, asset allocation and performance expectations. Over 120 family offices, with an average asset size of 776 million, took part in the survey. The survey revealed some interesting results. For example, despite seemingly low risk appetites, the average family office still has an allocation to high risk assets of over 70%. Also, even in an economic climate with low yields and increased uncertainty, the majority of family offices are targeting returns of 4% or more above current cash rates. This paper explores some of these interesting survey results in more detail. Capital preservation is increasingly important As would be expected, family offices levels of risk aversion have increased since the 2008 global financial crisis. Before 2008, 23% of family offices described themselves as risk averse. According to the survey, this number has now doubled to 46%. Consistent with this, the survey also found that capital preservation and risk reduction consistently ranked highest when family offices were asked to define their primary strategic goals. Investment risk appetite appears to have fallen over the last five years, and similarly strategic goals have also shifted from return-seeking to more of a focus on risk management. However, the results of the survey highlighted what appear to be some inconsistencies between current levels of risk aversion, the asset allocations being adopted and the levels of return being targeted. Investment risk appetite appears to have fallen over the last five years, and similarly strategic goals have also shifted from return-seeking to more of a focus on risk management. 2 towerswatson.com
3 Family offices continue to adopt high-risk investment strategies Figure 01 shows a representation of the average family office asset allocation taken from the survey. Overall we note that the average family office portfolio has an allocation to higher risk assets of 72% and only a 28% allocation to lower risk fixed income assets and cash. It appears that, on average, family offices are still running relatively aggressive investment strategies despite their contracted risk appetites. To help quantify the levels of risk and return being run under these asset strategies, we have used the Towers Watson Investment Model to calculate the risk and return for the average family office portfolio and each of the individual participant portfolios (see Figure 02 below). Figure 01. The average family office asset allocation 28% 28% Lower risk assets 72% Higher risk assets Higher risk assets Lower risk assets 25% Equities 21% Absolute return/hedge funds 17% Real estate 14% Private equity 7% Emerging market and high yield debt 6% Emerging market equity 4% Commodities 1% Tangible assets 6% Other 64% Fixed income 36% Cash Figure 02. Participants displayed a broad spectrum of risk/return levels Long-term expected return (pa) 8% 7% 6% 5% 4% 3% 2% 1% 0% 2% 7% 12% 17% 22% 27% 32% One-year volatility Individual family office allocations Average family office allocation Family offices Aligning investment risk and return objectives 3
4 According to our assumptions 1, the average family offi ce allocation has a one-year volatility of return of around 11% and a 10-year expected return of around 5.5% pa 2. This means that roughly two-thirds of the time we expect the portfolio to achieve a return of between 5.5% and +16.5% over a one-year period and one-sixth of the time for a return lower than 5.5%. Hence there is reasonable chance that for the average family offi ce, the key objective of capital preservation will not be met. In addition, the comparison for many of the family offi ces suggests even riskier asset strategies are being adopted. In our view, the analysis above suggests a misalignment between portfolio risk levels and the key family offi ce objectives of capital preservation and risk reduction that should be reconciled. Are the investment returns being targeted achievable? As part of the survey, family offi ces were asked to state their medium-term investment return targets. To put these stated return targets into context, we have compared the expected returns based on the individual family offi ce asset strategies against these targets. In Figure 03 we show two pie charts. The chart on the left shows the answers to the return target survey question split into four different ranges. The chart on the right shows which of these ranges the individual participants fi t into according to our asset model return assumptions and their stated asset allocations. Figure 03. Overly optimistic return targets? Survey results Towers Watson expected results Gain of 0% 3% Gain of 3% Gain 6% of 0% -3% Gain of 3% - 6% Gain of 6% 10% Gain of 10% Gain or more of 6% -10% Gain of 10% or more 1 All assumptions in this paper are as at 30 September This is the 10-year annualised median return from our model. 4 towerswatson.com
5 Looking at the survey results, we note that around 15% of family offi ces are conservative, targeting returns between 0% and 3%. Over a quarter of respondents are aiming for what we would consider to be realistic returns of between 3% and 6%. Interestingly, the overwhelming majority are targeting returns of between 6% and 10% and nearly 10% are targeting returns of 11% or more. Looking at our expected returns, we see that we expect roughly three-quarters of the family offi ces that took part to fall in the 3% -6% return range and a quarter to fall in the 6% -10% return range. We also note that the maximum expected return from our model was just 7.5% pa. From this we can deduce that many family offi ces are targeting unrealistic levels of return and/or are using overly optimistic long-term asset return assumptions. Either way, it seems that a large proportion of family offi ce return targets again appear inconsistent with capital preservation objectives and current heightened levels of risk aversion. What about the current environment? One explanation for the possible misalignment of return targets with expected returns is the current economic environment, with very low levels of cash and bond yields meaning expected returns for many of the lower risk asset classes are at close to zero. Hence, it is possible that the return targets have not yet been updated to refl ect the new normal of the post global fi nancial crisis economic climate. Consistent with the low level of cash and bond yields, the investment community is presently debating whether markets are beginning a great rotation : a large-scale movement of capital out of higher-grade bonds and cash into equities and other risky assets which would cause a sharp outperformance of equities over bonds. At present, our view is that equities will outperform bonds over the medium term, which is mainly driven by our view that the conditions discounted in both equity and bond markets are too pessimistic (that is, we believe that bonds are expensive relative to equities). The survey showed that there has been an increase in appetite for equity and private equity relative to the last time the survey was completed in February For example, in February % of respondents said that they were planning to increase their allocation to equities in the following 12 months. The August 2012 survey revealed that this fi gure had jumped to 49% of respondents. Conversely, appetites for fi xed income assets have reduced materially. In February 2012, 25% of respondents said that they were planning to decrease their allocation to fi xed income assets in the following 12 months. The August 2012 survey revealed that this fi gure had jumped to 40% of respondents. So it seems as though family offi ces are also buying into the rotation hypothesis, which appears to contradict the heightened levels of risk aversion and risk management focus discussed earlier. In reality family offi ces hands are being forced. At present, like all investors, they are having to perform a balancing act between managing risk and hunting for adequate yields in a climate where global monetary policy has driven interest rates and bond yields down to all-time lows. Family offi ces Aligning investment risk and return objectives 5
6 Can greater diversity better align risk and return expectations and aspirations? One approach to moving expected risk and return towards that required is to more effectively diversify the return exposures in the portfolio thus improving investment effi ciency (that is, to increase return per unit of risk). We note from Figure 01 that the average family offi ce portfolio appears to be quite well diversifi ed away from a traditional equity/fi xed income portfolio. We also note that family offi ces are looking to increase their level of geographic diversifi cation as the survey showed a material increase in appetite for emerging market investments (both debt and equity) since the February 2012 survey. But does the average family offi ce allocation diversify enough? We believe that further asset class diversifi cation is warranted. Figure 04 compares the main drivers 3 of returns for the average family offi ce portfolio with a scaled version of Towers Watson Investment Committee s model portfolio (scaled to have the same expected return as the average family offi ce portfolio). Return drivers represent the different sources of investment risk that are rewarded with investment return. The model portfolio spread between return drivers (see the grey bars in Figure 04) represents our view of an ideal long-term strategic spread across these drivers. Figure 04 shows that, relative to our model portfolio, the average family offi ce is overweight the equity risk premium. It also suggests that sources of outperformance can be further improved by investing in assets that are linked to the credit, insurance and currency risk premia since the average family offi ce portfolio is underweight in these areas. Figure 04. Family offices remain reliant on the equity risk premium 60% 50% 40% 30% 20% 10% 0% -10% Average family office allocation 4 Scaled model portfolio Equity Credit Illiquidity Insurance Currency Skill Term/inflation Figure 05. Portfolio risk/return characteristics Average family office allocation 4 10-year expected return (pa) 6.1% 6.1% One-year volatility 10.6% 9.2% We see that the scaled model portfolio has the same expected return as the average family office allocation but with a reduction in risk of around 15%. -3 Scale model portfolio -4 Figure 05 shows the risk and return statistics for the two portfolios. We see that the scaled model portfolio has the same expected return as the average family offi ce allocation but with a reduction in risk of around 15%. 3 See the appendix for further information. 4 Best-in-class alpha assumptions have been assumed to ensure a like-for-like comparison with the scaled model portfolio. 6 towerswatson.com
7 How can further diversification be achieved? There are further asset class diversification ideas (some of which are utilised in the model portfolio described above) that have not traditionally been used within family office portfolios, but would be expected to increase overall investment efficiency. Hence we believe that the implementation of these ideas would better align family office portfolios with their current risk/return objectives. One of these ideas is around the wider use of alternative beta strategies. These strategies sit somewhere between the common market return drivers ( beta ) and idiosyncratic returns from active management ( alpha ), and offer effective diversification with a relatively low governance requirement. As alternative betas are now becoming more mainstream and accessible, investors are now able to obtain direct access to these asset classes at a lower cost. Conclusions The survey revealed that family office risk appetites have fallen materially over recent years, and that strategic goals have also shifted from return-seeking to more of a focus on risk management. However, the survey also indicates that, for the most part, family offices continue to adopt higher-risk investment strategies and some have return targets that have a low likelihood of being achieved in the current economic climate. In other words, we see an apparent misalignment between investment risk levels and return targets, and family offices principal objectives of capital preservation and risk reduction. This misalignment is being exacerbated by current market conditions where all-time low interest rates are forcing investors into higher risk assets like equities, high yield bonds and emerging market debt. From the perspective of robust risk management, we recommend that family offices review and resolve this misalignment between risk and return objectives, although this is likely to require some compromises. In addition, asset classes do exist that can further increase diversification and hence help further bridge the gap between what is desirable and what is practically achievable in return terms under the current environment. Further information For further information, please use our contact details below: Michel Meert Senior Investment Consultant michel.meert@towerswatson.com Eric Zwickel Senior Investment Consultant eric.zwickel@towerswatson.com Andrew Epsom Senior Investment Strategy Consultant andrew.epsom@towerswatson.com Appendix Return drivers Towers Watson believes that there are a number of fundamental drivers of return. We believe that exploiting a mixture of these drivers, through investing in various asset classes, can improve the expected financial efficiency of an investment portfolio. We note that single asset classes can be exposed to multiple return drivers: Return driver/risk premium Equity Credit Illiquidity Insurance Term Inflation Currency Skill Investors are rewarded for bearing the risk of: Being lower down the capital structure in the event of corporate default Corporate bond issuers defaulting on their bond obligations Holding an asset that cannot be quickly or cheaply sold Providing protection against extreme losses The uncertain return and mark-to-market volatility of an index-linked bond compared to holding cash Inflation being higher than anticipated and therefore reducing real returns on fixed-interest bonds The risk that the purchasing power of the currency falls due to a currency crisis A manager, previously considered skilful, underperforming its benchmark Family offices Aligning investment risk and return objectives 7
8 About Towers Watson Towers Watson is a leading global professional services company that helps organisations improve performance through effective people, risk and financial management. With 14,000 associates around the world, we offer solutions in the areas of benefits, talent management, rewards, and risk and capital management. Towers Watson 21 Tothill Street Westminster London SW1H 9LL Disclaimer This document was prepared for general information purposes only and should not be considered a substitute for specific professional advice. In particular, its contents are not intended by Towers Watson to be construed as the provision of investment, legal, accounting, tax or other professional advice or recommendations of any kind, or to form the basis of any decision to do or to refrain from doing anything. As such, this document should not be relied upon for investment or other financial decisions and no such decisions should be taken on the basis of its contents without seeking specific advice. This document is based on information available to Towers Watson at the date of issue, and takes no account of subsequent developments after that date. In addition, past performance is not indicative of future results. In producing this document Towers Watson has relied upon the accuracy and completeness of certain data and information obtained from third parties. This document may not be reproduced or distributed to any other party, whether in whole or in part, without Towers Watson s prior written permission, except as may be required by law. In the absence of its express written permission to the contrary, Towers Watson and its affiliates and their respective directors, officers and employees accept no responsibility and will not be liable for any consequences howsoever arising from any use of or reliance on the contents of this document including any opinions expressed herein. Copyright 2013 Towers Watson. All rights reserved. TW-EU June towerswatson.com
Understanding emerging
Understanding emerging market equity While the emerging markets (EMs) theme seems to come in and out of fashion every few years, the thesis for taking advantage of the long-term, yet volatile growth that
More informationOur industry has a problem. The investment industry has been built by the intermediaries for the intermediaries
Our industry has a problem The investment industry has been built by the intermediaries for the intermediaries 2 towerswatson.com In this report, we present the results of a survey we conducted with asset
More informationEquity Market Risk Premium Research Summary. 12 April 2016
Equity Market Risk Premium Research Summary 12 April 2016 Introduction welcome If you are reading this, it is likely that you are in regular contact with KPMG on the topic of valuations. The goal of this
More informationThe Case for Investing in Corporate Bonds Rated Below Single A
The Case for Investing in Corporate Bonds Rated Below Single A Executive Summary Most non-life insurance companies invest in corporate bonds with a focus on securities rated single A and higher, with only
More informationInsights. Property & Casualty Insurance CFO Survey #3. Investment Strategies
Insights September 2012 Property & Casualty Insurance CFO Survey #3 Investment Strategies The third installment of Towers Watson s Property & Casualty Insurance CFO Survey examines CFO perspectives on
More informationInvestment Strategy for Pensions Actuaries A Multi Asset Class Approach
Investment Strategy for Pensions Actuaries A Multi Asset Class Approach 16 January 2007 Representing Schroders: Neil Walton Head of Strategic Solutions Tel: 020 7658 2486 Email: Neil.Walton@Schroders.com
More informationInvestment risk Balancing investment risk and potential reward
Investment risk Balancing investment risk and potential reward This guide has been produced for educational purposes only and should not be regarded as a substitute for investment advice. Vanguard Asset
More informationcreating more efficient portfolios
Investing for growth - creating more efficient portfolios First weigh the considerations, then take the risks. Helmuth van Moltke 42 towerswatson.com DC members have historically been heavily invested
More informationInvestment Risk Profile Questionnaire
Investment Risk Profile Questionnaire Professional Portfolio International Ltd. 209/1 K Tower, Tower B, 19th Fl., Unit 4 Tel +662 664 0968 Sukhumvit 21 Rd.(Asoke), Klongtoey Nua +662 664 0145 Wattana,
More informationPremier Private Client Portfolio
Premier Private Client Portfolio Available through Lighthouse Group LIGHTHOUSEGROUP Whether seeking a steady income stream, strong long term capital growth or a combination of both, finding a portfolio
More informationWhy own bonds when yields are low?
Why own bonds when yields are low? Vanguard research November 213 Executive summary. Given the backdrop of low yields in government bond markets across much of the developed world, many investors may be
More informationEffective downside risk management
Effective downside risk management Aymeric Forest, Fund Manager, Multi-Asset Investments November 2012 Since 2008, the desire to avoid significant portfolio losses has, more than ever, been at the front
More informationFixed Income Asset Allocation
Fixed Income Asset Allocation j a n n e y fixed income strat e g y While 2015 finished off with big spread widening in high yield, strong performance of our favorite sector, munis, overwhelmed losses in
More informationModels of Risk and Return
Models of Risk and Return Aswath Damodaran Aswath Damodaran 1 First Principles Invest in projects that yield a return greater than the minimum acceptable hurdle rate. The hurdle rate should be higher for
More informationSpectrum Insights. Time to float. Why invest in corporate bonds? - Value
Spectrum Insights Damien Wood, Principal JUNE 25, 2015 Time to float Investing in floating rate bonds as opposed to fixed rate bonds helps protect bond investors from price slumps. Spectrum expects that
More informationDefensive equity. A defensive strategy to Canadian equity investing
Defensive equity A defensive strategy to Canadian equity investing Adam Hornung, MBA, CFA, Institutional Investment Strategist EXECUTIVE SUMMARY: Over the last several years, academic studies have shown
More informationCONSTRUCTING A GROWTH FIXED INCOME PORTFOLIO MAY 2013
CONSTRUCTING A GROWTH FIXED INCOME PORTFOLIO MAY 2013 Context Currently developed market sovereign bonds are not appealing from an investment perspective. They offer negative or low real returns and are
More informationCAF MANAGED PORTFOLIO SERVICE. Profile selector for charities and not-for-profit organisations
CAF MANAGED PORTFOLIO SERVICE Profile selector for charities and not-for-profit organisations CAF MANAGED PORTFOLIO SERVICE Profile selector The CAF Managed Portfolio Service is developed and operated
More informationTHE ROLE OF LIQUID ALTERNATIVES IN WEALTH MANAGEMENT
HEALTH WEALTH CAREER THE ROLE OF LIQUID ALTERNATIVES IN WEALTH MANAGEMENT SEPTEMBER 2015 In this short paper, we focus on liquid alternative products and will, 1) explain the investment theses for investing
More informationObligation-based Asset Allocation for Public Pension Plans
Obligation-based Asset Allocation for Public Pension Plans Market Commentary July 2015 PUBLIC PENSION PLANS HAVE a single objective to provide income for a secure retirement for their members. Once the
More informationRISKS IN MUTUAL FUND INVESTMENTS
RISKS IN MUTUAL FUND INVESTMENTS Classification of Investors Investors can be classified based on their Risk Tolerance Levels : Low Risk Tolerance Moderate Risk Tolerance High Risk Tolerance Fund Classification
More informationCrafting a Forward Looking Investment Portfolio
BOURSE SECURITIES LIMITED February 15th, 2016 Crafting a Forward Looking Investment Portfolio This week, we at Bourse evaluate the investment considerations and opportunities having looked previously at
More informationSession 18, Tools for Evaluating Insurance Portfolio Investment Performance. Moderator: Peter C. Miller, FSA. Presenter: David L.
Session 18, Tools for Evaluating Insurance Portfolio Investment Performance Moderator: Peter C. Miller, FSA Presenter: David L. Braun, FSA Society of Actuaries 2015 Investment Symposium Tools for Evaluating
More informationPNC Target Date Funds. Making Saving for Retirement Simpler for You
PNC Target Date Funds Making Saving for Retirement Simpler for You Walking With You on the Path to Retirement We understand that with the number and variety of retirement savings options available to you,
More informationSpectrum Insights. Bond and stock market around the same size Australian bonds vs Australian stock market
Market capitalization $b Spectrum Insights Damien Wood, Principal JUNE 9, 2015 Corporate bonds often provides investors with an income stream that is above deposit rates, but less risky than dividends
More informationWHOLE OF LIFE SUPERANNUATION
WHOLE OF LIFE SUPERANNUATION Challenging the status quo NOVEMBER 2012 INTRODUCTION There is no question that Australia is one of the most mature Defined Contribution markets in the world. But while Australia
More informationWealth Management Solutions
Wealth Management Solutions Invest in the Future Life has significant moments. Making sure you re prepared for them is important. But what can you do when the pace of your life leaves you little time to
More informationUsing Derivatives in the Fixed Income Markets
Using Derivatives in the Fixed Income Markets A White Paper by Manning & Napier www.manning-napier.com Unless otherwise noted, all figures are based in USD. 1 Introduction While derivatives may have a
More informationGUIDE To INVESTING At Intrinsic our approach to investment advice is based on clearly understanding your financial situation, your goals, and how
GUIDE To INVESTING At Intrinsic our approach to investment advice is based on clearly understanding your financial situation, your goals, and how much risk you are prepared to take with your money. 2 GUIDE
More informationInvestment Portfolio Management and Effective Asset Allocation for Institutional and Private Banking Clients
Investment Portfolio Management and Effective Asset Allocation for Institutional and Private Banking Clients www.mce-ama.com/2396 Senior Managers Days 4 www.mce-ama.com 1 WHY attend this programme? This
More informationPowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1
PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1 The unit investment trusts named above (the Portfolios
More informationImpact of rising interest rates on preferred securities
Impact of rising interest rates on preferred securities This report looks at the risks preferred investors may face in a rising-interest-rate environment. We are currently in a period of historically low
More informationCommodities. Precious metals as an asset class. April 2011. What qualifies as an asset class? What makes commodities an asset class?
Commodities Precious metals as an asset class April 2011 What qualifies as an asset class? Broadly speaking, an asset class is simply a grouping of assets that possess similar characteristics. Defining
More informationWhy Invest in a Non-Traded Business Development Company?
Why Invest in a Non-Traded Business Development Company? This literature must be read in conjunction with the prospectus in order to fully understand all of the implications and risks of the offering of
More informationInvestment insight. Fixed income the what, when, where, why and how TABLE 1: DIFFERENT TYPES OF FIXED INCOME SECURITIES. What is fixed income?
Fixed income investments make up a large proportion of the investment universe and can form a significant part of a diversified portfolio but investors are often much less familiar with how fixed income
More informationManaging Risk/Reward in Fixed Income
INSIGHTS Managing Risk/Reward in Fixed Income Using Global Currency-Hedged Indices as Benchmarks In the pursuit of alpha, is it better to use a global hedged or unhedged index as a benchmark for measuring
More information2013 GSAM Insurance Survey & Industry Investment Trends
Global Insurance Asset Management AASCIF Annual Workshop Fall 23 23 GSAM Insurance Survey & Industry Investment Trends Michael Siegel, PhD Global Head of GSAM Insurance Asset Management September 3, 23
More informationSeeking Alternatives. Senior loans an innovative asset class
Trends 09 10.11 Seeking Alternatives Senior loans an innovative asset class Dirk Wieringa, Alternative Investments Advisory Senior loans are an innovative asset class that provide a hedge against rising
More informationDiversified Growth Funds & implications for actuarial assumptions
Diversified Growth Funds & implications for actuarial assumptions Part 1: Actuarial return and discount rate assumptions Subtitle: But Mother, look! The Emperor isn t wearing any clothes! Is it reasonable
More informationAsset allocation A key component of a successful investment strategy
Asset allocation A key component of a successful investment strategy This guide has been produced for educational purposes only and should not be regarded as a substitute for investment advice. Vanguard
More informationSimplifying Unconstrained Fixed Income Investing
Investment Management Fixed Income Team, July 204 Simplifying Unconstrained Fixed Income Investing Introduction Financial markets fluctuations in recent years and central banks attempts to sustain the
More informationDiscussion of Discounting in Oil and Gas Property Appraisal
Discussion of Discounting in Oil and Gas Property Appraisal Because investors prefer immediate cash returns over future cash returns, investors pay less for future cashflows; i.e., they "discount" them.
More informationThe UBS Core-Satellite investment approach Build wealth for the long term and make the most of your own investment ideas
The UBS Core-Satellite investment approach Build wealth for the long term and make the most of your own investment ideas StabiIity, opportunity and flexibility build the foundation for optimal results
More informationEIOPA Risk Dashboard March 2015 Q4 2014 data PUBLIC. EIOPA-FS-15/209 Frankfurt, 20th March 2015
EIOPA Risk Dashboard March 2015 Q4 2014 data PUBLIC EIOPA-FS-15/209 Frankfurt, 20th March 2015 Summary The release of this EIOPA Risk Dashboard is based on 2014- Q4 indicators submitted on a best effort
More informationPortfolio Management Consultants Perfecting the Portfolio
Portfolio Management Consultants Perfecting the Portfolio Envestnet PMC is the ultimate advisor to the advisor. Our goal is to help advisors strengthen relationships with their clients and improve outcomes
More informationFRC Risk Reporting Requirements Working Party Case Study (Pharmaceutical Industry)
FRC Risk Reporting Requirements Working Party Case Study (Pharmaceutical Industry) 1 Contents Executive Summary... 3 Background and Scope... 3 Company Background and Highlights... 3 Sample Risk Register...
More informationTRANSAMERICA SERIES TRUST Transamerica Vanguard ETF Portfolio Conservative VP. Supplement to the Currently Effective Prospectus and Summary Prospectus
TRANSAMERICA SERIES TRUST Transamerica Vanguard ETF Portfolio Conservative VP Supplement to the Currently Effective Prospectus and Summary Prospectus * * * The following replaces in their entirety the
More informationINVESTMENTS FOR LIVING. Introducing Lifestyle Portfolios
INVESTMENTS FOR LIVING Introducing Lifestyle Portfolios I WANT INVESTMENTS THAT GIVE ME FLEXIBILITY AND CHOICE Lifestyle Portfolios from Lloyds Bank International help you keep pace with the ever-changing
More informationSpreading investment risk
1 Spreading investment risk Spreading investment risk Why and how should I diversify my assets? 1 Spreading investment risk Contact: Doug Steevens FIA Portfolio Manager +44 (0)20 7086 9312 douglas.steevens@aonhewitt.com
More informationRethinking Fixed Income
Rethinking Fixed Income Challenging Conventional Wisdom May 2013 Risk. Reinsurance. Human Resources. Rethinking Fixed Income: Challenging Conventional Wisdom With US Treasury interest rates at, or near,
More informationUnderstanding investment concepts Version 5.0
Understanding investment concepts Version 5.0 This document provides some additional information about the investment concepts discussed in the SOA so that you can understand the benefits of the strategies
More informationInvestment Bond. Funds key features. This is an important document. Please keep it safe for future reference.
Investment Bond Funds key features. This is an important document. Please keep it safe for future reference. 2 WHAT ARE THE FUNDS KEY FEATURES? This document is part of the information we provide you to
More informationSchroders Investment Risk Group
provides investment management services for a broad spectrum of clients including institutional, retail, private clients and charities. The long term objectives of any investment programme that we implement
More informationDYNAMIC DIVERSIFIED FUND
DYNAMIC DIVERSIFIED FUND The Right Assets at the Right Time The SSgA Dynamic Diversifed Fund uses proven market-aware intelligence to dynamically adjust asset allocation ensuring you are in the right assets
More information1 JULY 2015. Investment Guide INDUSTRY, CORPORATE AND PERSONAL DIVISIONS
1 JULY 2015 Investment Guide INDUSTRY, CORPORATE AND PERSONAL DIVISIONS Your investment choice TWUSUPER was established in 1984 as the Industry SuperFund for people in transport and logistics. By understanding
More informationTHE CASE FOR REAL RETURN INVESTING
Perpetual Investments THE CASE FOR REAL RETURN INVESTING For many, the primary goal of investing is to accumulate sufficient assets to fund a comfortable retirement whether that s in 5 or 50 years time.
More informationModule 1 Introduction to ETFs
Module 1 Introduction to ETFs Course #: Title Topic 1: Big picture investing... 3 Which stock to buy?... 3 Why take a big picture approach?... 3 How can you invest in the market?... 4 Topic 2: What are
More informationInvestment options and risk
ADF Super Australian Defence Force Superannuation Investment options and Issued 2 June 2016 The information in this document forms part of the Product Disclosure Statement for the Australian Defence Force
More informationSTATE STREET INVESTOR CONFIDENCE INDEX SUMMARY
STATE STREET INVESTOR CONFIDENCE INDEX SUMMARY state street investor confidence index Measuring Investor Confidence on a Quantitative Basis The State Street Investor Confidence Index (the index) provides
More informationMERCHANT NAVY OFFICERS PENSION FUND STATEMENT OF INVESTMENT PRINCIPLES
MERCHANT NAVY OFFICERS PENSION FUND STATEMENT OF INVESTMENT PRINCIPLES Introduction The main purpose of the MNOPF is the provision of pensions for Officers in the British Merchant Navy on retirement at
More informationSSgA CAPITAL INSIGHTS
SSgA CAPITAL INSIGHTS viewpoints Part of State Street s Vision thought leadership series A Stratified Sampling Approach to Generating Fixed Income Beta PHOTO by Mathias Marta Senior Investment Manager,
More informationWhy Strategic Bond funds are failing investors
Why Strategic Bond funds are failing investors March 2016 For Professional Investors only The rise of Strategic Bonds The IA Sterling Strategic Bond sector was launched to much fanfare in 2008. The birth
More informationUnderstanding investment concepts
Version 4.2 This document provides some additional information to help you understand the financial planning concepts discussed in the SOA in relation to. Important information This document has been published
More informationA 10-year Investment Performance Review of. the MPF System. (1 December 2000 31 December 2010)
A 10-year Investment Performance Review of the MPF System (1 December 2000 31 December 2010) Acknowledgement The methodology and analysis of this report have been reviewed by Prof Kalok Chan, Synergis-Geoffrey
More informationMETLIFE FUND LIST FOR NEW INVESTMENT
METLIFE FUND LIST FOR NEW INVESTMENT RETIREMENT PORTFOLIO - INVESTMENT BOND PORTFOLIO - TRUSTEE RETIREMENT PORTFOLIO - ISA PORTFOLIO MAY 2016 Contents 1 Introduction 3 2 Managing risk in investment management
More informationA Basic Introduction to the Methodology Used to Determine a Discount Rate
A Basic Introduction to the Methodology Used to Determine a Discount Rate By Dubravka Tosic, Ph.D. The term discount rate is one of the most fundamental, widely used terms in finance and economics. Whether
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
ECON 4110: Sample Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Economists define risk as A) the difference between the return on common
More informationInvestment Management A creator of value in an insurance company
Investment Management A creator of value in an insurance company Zurich Insurance Group Ltd Third edition Investment Management A creator of value in an insurance company Disclaimer and cautionary statement
More informationAbout Hedge Funds. What is a Hedge Fund?
About Hedge Funds What is a Hedge Fund? A hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds, and invest in almost
More informationRisks and Rewards Newsletter
Article from: Risks and Rewards Newsletter August 2006 Issue No. 48 I NVESTMENT S ECTION A KNOWLEDGE COMMUNITY FOR THE SOCIETY OF ACTUARIES Issue No. 48 August 2006 RISKS AND REWARDS T HE N EWSLETTER OF
More informationAre You in the Wrong Target-Date Fund?
Insights August 2014 Are You in the Wrong Target-Date Fund? Now Is a Good Time to Reevaluate TDFs may have different investment strategies, glide paths, and investment-related fees. Because these differences
More informationRetirees Needs and Their (In)Tolerance for Risk
Retirees Needs and Their (In)Tolerance for Risk A report by and Challenger March 2013 nationalseniors.com.au 2013 owns copyright in this work. Apart from any use permitted under the Copyright Act 1968,
More informationGlossary of Investment Terms
online report consulting group Glossary of Investment Terms glossary of terms actively managed investment Relies on the expertise of a portfolio manager to choose the investment s holdings in an attempt
More informationmore of the same. True diversification shouldn t mean Aberdeen Diversified Growth Fund
True diversification shouldn t mean more of the same. Aberdeen Diversified Growth Fund Lots of strategies call themselves diversified growth funds. But look closely and see how diversified they really
More information3Q14. Are Unconstrained Bond Funds a Substitute for Core Bonds? August 2014. Executive Summary. Introduction
3Q14 TOPICS OF INTEREST Are Unconstrained Bond Funds a Substitute for Core Bonds? August 2014 Executive Summary PETER WILAMOSKI, PH.D. Director of Economic Research Proponents of unconstrained bond funds
More informationsmart Two Paths to Investing for Retirement Which one is right for you? Massachusetts Deferred Compensation SMART Plan INVEST
smart S A V E M O N E Y A N D R E T I R E T O M O R R O W INVEST Two Paths to Investing for Retirement Which one is right for you? Massachusetts Deferred Compensation SMART Plan Office of the State Treasurer
More informationINVESTMENT POLICY STATEMENT Valued Client
INVESTMENT POLICY STATEMENT Valued Client August 17, 2010 PREPARED BY: John Ohl Bay Colony Advisors 91 Main St STE 308 Concord, Massachusetts 01742 (978) 369-7200 John@baycolonyadvisors.com www.baycolonyadvisors.com
More informationDelivering sustainable global growth
Delivering sustainable global growth Driving profits by growing third party assets Keith Skeoch CEO, Standard Life Investments This presentation may contain certain forward-looking statements with respect
More informationNorthCoast Investment Advisory Team 203.532.7000 info@northcoastam.com
NorthCoast Investment Advisory Team 203.532.7000 info@northcoastam.com NORTHCOAST ASSET MANAGEMENT An established leader in the field of tactical investment management, specializing in quantitative research
More informationNCC Pension Fund Cash Flow and Strategic Asset Allocation
Background NCC Pension Fund Cash Flow and Strategic Asset Allocation At recent Sub Committee meetings there has been some discussion of, and some concern expressed at, the possible evolution of contributions
More informationTarget Date Fund Selection: More Than Simply Active vs. Passive
Target Date Fund Selection: More Than Simply Active vs. Passive White Paper October 2015 Not FDIC Insured May Lose Value No Bank Guarantee INVESTMENT MANAGEMENT Table of Contents Executive Summary 2 Introduction
More informationInsights. Investment strategy design for defined contribution pension plans. An Asset-Liability Risk Management Challenge
Insights Investment strategy design for defined contribution pension plans Philip Mowbray Philip.Mowbray@barrhibb.com The widespread growth of Defined Contribution (DC) plans as the core retirement savings
More informationFIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK
1 FIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK By Michael McMurray, CFA Senior Consultant As all investors are aware, fixed income yields and overall returns generally have been
More informationMarket Linked Certificates of Deposit
Market Linked Certificates of Deposit This material was prepared by Wells Fargo Securities, LLC, a registered brokerdealer and separate non-bank affiliate of Wells Fargo & Company. This material is not
More informationYour Investment Options
Your Investment Options lackrock EDS Investment uyout Plan A choice of funds to help you meet your retirement goals This guide shows you the range of investment options available through the lackrock EDS
More informationSeeking a More Efficient Fixed Income Portfolio with Asia Bonds
Seeking a More Efficient Fixed Income Portfolio with Asia s Seeking a More Efficient Fixed Income Portfolio with Asia s Drawing upon different drivers for performance, Asia fixed income may improve risk-return
More informationEstimating the Market Risk Premium for Australia using a Benchmark Approach
Appendix B Estimating the Market Risk Premium for Australia using a Benchmark Approach 1 The market risk premium ( MRP ) for Australia in 2005 and going forward is set in an international market. Investment
More informationInvesting 200: Behind the scenes on Western s two largest funds
Investing 200: Behind the scenes on Western s two largest funds Martin Bélanger Director, Investments November 20, 2015 Human Resources Disclaimer This presentation material was created to educate and
More informationGuide to Investment Risk
Guide to Investment Risk What is risk? Risk is another word for uncertainty. While all investments carry an element of risk, the amount of risk you take directly affects any potential returns and losses.
More informationInvestment options and risk
Investment options and risk Issued 1 July 2015 The information in this document forms part of the Product Disclosure Statement for the Public Sector Superannuation accumulation plan (PSSap), eighth edition,
More informationDavy Defensive High Yield Fund from New Ireland
Davy Asset Management For Financial Advisors Only Davy Defensive High Yield Fund from New Ireland Davy Asset Management is regulated by the Central Bank of Ireland. Exposure to: equity-market type returns
More informationMODULE 3 THE NEXT BIG THING
INVESTING: STOCKS, BONDS & MUTUAL FUNDS This lesson has students learning about stocks, bonds, and mutual funds. The concepts of risk and reward, and return on investment (ROI) are explored. The FIT Work
More informationGoal Based Investment Risk Profile
Goal Based Investment Risk Profile Introduction Income / Growth from my investments You will have read the explanatory text on screen when completing the Goal Based Investment Risk Profiler. This explained
More informationINVESTING YOUR SUPER. This document forms part of the NGS Super Member Guide (Product Disclosure Statement) dated 14 August 2015
This document forms part of the NGS Super Member Guide (Product Disclosure Statement) dated 14 August 2015 INVESTING YOUR SUPER FACT SHEET 5 14 AUGUST 2015 NGS Super offers you flexibility and choice when
More informationGood [morning, afternoon, evening]. I m [name] with [firm]. Today, we will talk about alternative investments.
Good [morning, afternoon, evening]. I m [name] with [firm]. Today, we will talk about alternative investments. Historic economist Benjamin Graham famously said, The essence of investment management is
More informationAbsolute return: The search for positive returns in changing markets
Absolute return: The search for positive returns in changing markets Tuesday, 7 June 2011 Portfolio Manager for Global Fixed Income and Absolute Return Funds www.dbadvisors.com Topics for discussion What
More informationReferred to as the statement of financial position provides a snap shot of a company s assets, liabilities and equity at a particular point in time.
Glossary Aggressive investor Balance sheet Bear market Typically has a higher risk appetite. They are prepared or can afford to risk much more and for this they stand to reap the big rewards. Referred
More informationUNDERSTANDING MUTUAL FUNDS. TC83038(0215)3 Cat No 64095(0215)
UNDERSTANDING MUTUAL FUNDS 10 % TC83038(0215)3 Cat No 64095(0215) Investing your hard earned money comes with some big decisions. So, before you invest, you need to ask yourself a simple question: What
More informationCorporate Portfolio Management
Corporate Risk Corporate Portfolio Management Capital allocation from a risk-return perspective Premise Aligning the right information with the right people to make effective corporate decisions is one
More information