Please login to print this page


Value Harvest Sows Seeds for Opportunities Outside the United States

Published by Franklin Templetown

With the nascent rally in global value stocks now underway, where is the next pocket of overlooked opportunity for patient bargain hunters? In this paper, Templeton Global Equity Group explains that equities in Europe, Asia and emerging markets today appear to be undervalued, under-owned and positioned to benefit from burgeoning catalysts.

Global Macro Shifts—Trade and Taxes in a World with Borders

Published by Franklin Templetown

This edition of Global Macro Shifts examines US corporate tax reform and the potential impacts of a border adjustment tax (BAT). Templeton Global Macro reviews how a BAT would work, its likely effect on prices and exchange rates, its implications for the longer-term macroeconomic outlook, its impact on different domestic sectors and trade flows, and the potential ramifications for international trade relations.

Survey: The Path To Transparency in Alternatives Investing

Published by Northern Trust

As alternative investments have become mainstream, Northern Trust sponsored a survey with the Economist Intelligence Unit to ask 200 global managers and investors to assess how perspectives about alts have changed. Northern Trust’s latest paper discusses the survey, how views on transparency have evolved since the financial crisis, and the need for industry consensus around best practices in governance. Download “The Path to Alternatives Transparency” to learn what the mainstreaming of alts means for your organization.

Global Outlook- Looking Beyond the Cycle

Published by PGIM

Authors: Cuong Nguyen, Head of Asia Pacific Research, Greg Kane, Executive Director and Kelly Whitman, Vice President
In PGIM Real Estate’s latest Investment Research paper, “ Global Outlook: Looking Beyond the Cycle ,” we look beyond the cycle to assess values we are seeing today in a long-term context. Our analysis of the global property risk premium suggests that pricing looks sensible in a long-term context and offers decent protection against a moderate increase in interest rates. Looking ahead, one of the challenges likely facing investors is finding attractive income streams and sources of growth that can deliver target returns. To a greater degree than in recent years, investment performance is reflecting the idiosyncrasies of local markets and global investors stand to benefit from effective portfolio diversification strategies.

Managing Equity Portfolio Volatility by Harnessing the Volatility Risk Premium

Published by Eaton Vance

After eight years of stock market gains, many investors have tempered their return expectations and are focusing attention on how best to best achieve equity-like returns with less risk.

Emerging Markets Debt: Has the Rally Run its Course?

Published by Barings

Spreads for EM debt are approaching multi-year lows at a time when many EM economies including Argentina, China, Brazil, Mexico, Russia, South Africa and Turkey face challenges. Performance has been stellar over the past year and in the year to date. So what is the outlook for investors? How do inflation, spreads, capital flows, and monetary policy impact the risk-reward characteristics for EM debt? With a supportive macro backdrop, we see a favorable investment outlook for emerging markets debt, and explore opportunities across sovereign, local currency and corporate debt

Credit Market Investing: Stop Watching the Clock. The Fundamentals Matter More

Published by Barings

Investors are questioning how much longer the current credit cycle has to run. Of course, each cycle does not follow a predefined, finite timeline, and the cycle position can vary widely by industry, sector and geography. Regardless of where investors believe we are in the credit cycle, volatility events (potential or actual) are likely to be somewhere in the frame. So what does all this mean for investors? How can they best position their fixed income portfolios? As we evaluate the fundamentals across high yield, investment grade credit and emerging markets debt, we continue to see a range of opportunities—but selectivity is the key

The Art of Originating and Sourcing Private Assets... and the Potential Benefits to Investors

Published by Barings

Explore the benefits of private asset investing and learn how a variety of private markets can offer investors compelling return and yield opportunities. Without a formal market where buyers and sellers of private assets can interact, how are private asset investments sourced? What makes a successful origination platform and how can it ultimately benefit investors across Direct Lending, Private Equity, Infrastructure Debt and private Real Estate investments? The ability to originate and/or source deals and transactions is critical to successful investment in these assets.

Taming the Data Sea — 5 Essential Questions for Building a Better Data Strategy

Published by Northern Trust

A recent survey of asset managers globally by Northern Trust and the Economist Intelligence Unit (EIU) found that, on the whole, the industry has capitalized on the explosion of available data, but some firms are benefiting significantly more than others. In fact, only 13% of managers surveyed felt that their data strategy was entirely successful in helping meet business objectives. Northern Trust draws on best practices and experiences with clients to outline five essential questions you should answer when developing a data strategy.

Cash: An Asset in Adolescence

Published by Northern Trust

A combination of persistent low interest rates, interest in illiquid investments such as private equity and the unintended consequences of regulations have made effective liquidity management a challenge for investors and managers alike. In this paper, Northern Trust shares its experiences working with investors and managers to employ various strategies and adopt best practices that can help manage and source cash efficiently.

10 Questions to Ask your Alternatives Provider

Published by Northern Trust

Alternative investments are rapidly growing in both popularity and complexity. In this paper, we outline important questions to guide your assessment of alternative asset servicing providers across key themes: capabilities, long-term strategic fit, finding the right service model, and more.

Institutionalizing DC Plans

Published by Northern Trust

As defined contribution retirement plans grow in popularity and importance, the industry has come a long way. In collaboration with Clear Path Analysis, Northern Trust produced a series of articles, interviews, and roundtables on the current state and future direction of DC Plans.

Emerging-market debt: Navigating the allocation dilemma

Published by Eaton Vance

Authors: Michael A. Cirami, CFA, Matthew F. Murphy, Jr., CFA, CAIA
Description: Positive fundamental changes in emerging markets over the past 10-15 years, along with robust economic growth and the proliferation of emerging-market debt (EMD) indices, have helped transform EMD into a mainstream asset class.

Capitalising on the growth of the global high-yield market

Published by 

Michael Weilheimer, CFA, Jeff Mueller, Kelley Baccei, Steve Concannon, CFA, Will Reardon
High-yield bonds occupy a special capital market niche: They have offered significantly better risk-adjusted returns than equities and lower interest-rate sensitivity than the broad fixed-income market.

Following a strong year for loans, it’s back to the (floating) future

Published by Eaton Vance

Craig Russ, Ralph Hinckley
In 2016, floating-rate loans rebounded from two subpar years with a total return of 10.2%, or about twice the long-term average, as nearly two years of retail fund redemptions abated.

What’s to be made of the “Trump reflation trade”?

Published by Eaton Vance

Payson F. Swaffield, CFA
In the weeks following the November election, stock and bond markets both predicted boosts in growth and inflation – i.e., the “Trump reflation trade.”

Bonds Are Different: Active Versus Passive Management in 12 Points

Published by

Jamil Baz, Ravi Mattu, James Moore and Helen Guo
Up to now, the active-passive debate has focused mostly on stocks. This PIMCO research paper revisits the discussion by contrasting equity and fixed income markets in the U.S. It looks at performance numbers and finds that, unlike their stock counterparts, active bond mutual funds and ETFs have largely outperformed their passive peers after fees over the last 10-year period. It explores what the reasons for this could be, or, why "bonds are different."

  • A different kind of target-date investor

    Published by Vanguard

    Cynthia Pagliaro and Stephen Utkus
    Roughly one-third of plan participants who are in target-date funds at Vanguard are "mixed" target-date investors. In other words, they combine a target-date fund with other plan investment options. There are concerns that mixed target-date investors are misusing what are meant to be all-in-one funds and take on added risk in their portfolios through overlapping securities and unintended concentration in certain sectors.

    In A different kind of target-date investor , authors Cynthia Pagliaro and Stephen Utkus examine how participants become mixed target-date investors, determine if the concerns raised about mixed target-date investors are valid, and suggest measures to avoid such risks.

      • An Examination of Global Asset Allocation and Home Bias

        Published by Vanguard

        Brian J. Scott, CFA; James Balsamo; Kelly N. McShane; Christos Tasopoulos
        In 1986, Gary Brinson, L. Randolph Hood, and Gilbert Beebower concluded that asset allocation is the primary driver of return variability for a broadly diversified portfolio over time. Since then, some investment professionals have disagreed with the findings. This Vanguard research paper aims to bring clarity to the topic by examining two key questions: How does asset allocation affect your risk/return expectations? And how much home bias is reasonable?

      • Constructing a defined contribution investment lineup: Four best practices

        Published by Vanguard

        Frank Chism, CAIA; Kelly N. McShane; Stephen P. Utkus
        New Vanguard research shows how the role of target-date funds (TDFs) is changing the dynamics of participant decision-making in defined contribution (DC) plan menus. Vanguard proposes four best practices for constructing a plan lineup: (1) identifying plan objectives; (2) focusing on the fundamentals of investing; (3) creating a tiered lineup that reflects plan objectives; and (4) ensuring active, ongoing oversight.

      • Start of Something Big: Demystifying the Source of Large Alpha in Small Caps

        Published by QMA

        What is behind the apparent greater opportunity for alpha in small caps? Here, we solve one of the enduring mysteries, providing investors with a clear blueprint for how best to access one of today’s most fertile alpha sources going forward.

      • Longevity & Liabilities: Bridging the Gap

        Published by PGIM

        In this paper, PGIM builds upon the insights from our recent report, A Silver Lining: The Investment Implications of an Aging World, to discuss the challenges posed to pension plan sponsors by longevity risk and the options available for managing it.

      • Retirement Distribution Decisions Among DC Participants

        Published by Vanguard

        The overwhelming majority of retirement-age defined contribution (DC) plan participants leave their employer’s retirement plan within five years of separation from service, mostly for an individual retirement account (IRA) rollover account. When plans permit flexible distributions, retirement-age participants are more likely to remain in the employer plan. In this Vanguard research paper, Retirement distribution decisions among DC participants, author Jean Young explores the impact of retirement distribution decisions on target-date fund design and retirement income programs.

      • Best Practices in Factor-Based Analytics

        Published by Axioma

        As a portfolio manager, have you ever been surprised by a bad return period? Or wondered if there is a better way to identify the risks in your portfolio? Have you wanted to look for sources of return beyond sector breakdowns? If so, this paper will provide an overview into how you can address these questions and more.

      • Understanding the benefits of REITs in the US market

        Published by FTSE Russell

        Real Estate Investment Trusts (REITs) have enabled investors of all types to gain access to a regular income stream, a diversified portfolio of underlying properties and a link to the capital values of the portfolio holdings by means of companies with securities listed on a public stock exchange.
        This Index Insights from FTSE Russell provides an overview of REITs with particular consideration given to:

        ✓ A description of what they are

        ✓ The types

        ✓ Their role as an inflation-protecting investment

        ✓ Their income

        ✓ The FTSE NAREIT US Real Estate Index Series

        ✓ Equity and mortgage REITs—relative performance

        ✓ Listed real estate exposure via REITs

      • Technology and Operations Outsourcing

        A Guide for Asset and Wealth Managers

        Published by SS&C Advent

        The question is no longer whether you should look at outsourcing, but what functions and how much should be outsourced. Read this whitepaper, which explores a wide range of outsourcing options and explains the strategic advantages of outsourcing today.

      • Smart Beta and the Evolution of Factor-Based Investing

        Published by PNC Capital Advisors

        In recent years, smart beta strategies captured the attention of many investors. PNC Capital Advisors has been a long-standing advocate and practitioner of factor-based investing, with our Advantage Equity and Structured Equity teams employing multi-factor-based investment strategies for over 10 years. In this paper we discuss how smart beta works, its strength as an investment strategy, and its efficacy. We also delve into how to extend multi-factor investing beyond a smart beta approach.

      • Vanguard Life-Cycle Investing Model: A framework for building target-date portfolios

        Published by Vanguard

        Interest in tailored target-date fund solutions continues to grow. New tools from Vanguard can help plan sponsors determine if their plan participants could benefit from a glide path designed for their unique participant populations.

        In Vanguard Life-Cycle Investing Model: A framework for building target-date portfolios, authors Roger Aliaga-Díaz, Harshdeep Ahluwalia, Kevin DiCiurcio, Matthew Brancato, Scott Donaldson, and David Pakula explain the inner workings of Vanguard's proprietary model for glide path construction. The VLCM enables cost-benefit analysis of glide path customization, evaluation of risk-return trade-offs, and portfolio performance simulation under different market scenarios. The paper also shares general findings on which participant populations could see the greatest benefit from glide path customization.

      • As Investors Flock to Emerging Markets, Whither Risk?

        Published by Axioma

        Emerging Markets (EM) have been a big winner this year, turning in strong performance and seeing risk forecasts decline. Investors with a refreshed appetite for global risk have poured money into these markets. The enthusiasm could be facing headwinds, however. In this study, we delve into the various components of risk and what investors might want to keep an eye on as they consider EM for their capital allocations.

      • Capturing the Chinese A-shares and H-shares Anomaly

        Published by FTSE Russell

        The Chinese equity market is composed of a domestic and offshore market. The existence of the domestic A-share and the offshore H-share markets provides a choice for a Chinese company to choose its listing venue where the stock could be dually-listed on both markets. As the restrictions to invest in the China market are easing, investors look for tools to assist them as they aim to capture different aspects of the Chinese equity market.

        The behaviour of the price differential between A-shares and H-shares of dual-listed companies is studied from 2006-2016 in this paper. There is also an investigation into whether a share class selection mechanism applied to a universe of Chinese stocks can deliver improved index characteristics compared to a market-capitalisation weighted China A-shares benchmark.

      • Borrowing to Fund Pensions Could Increase Shareholder Value

        Published by Prudential

        Steadily escalating PBGC premiums coupled with persistently low interest rates have created unique opportunities for companies to reduce pension risk through a borrow-to-fund strategy. This paper examines the economic advantages of borrowing to fund pension plans—an approach that may also create shareholder value. By borrowing to fund deficits, firms replace uncertain (and often volatile) debt obligations—underfunded pensions—with a set amount of debt that includes a fixed funding cost. Today, sponsors of underfunded plans can borrow at attractive rates, allocate the funds to their plans, diminish or eliminate pension deficits, and negate PBGC variable rate premiums. This piece explains why borrowing to fund can be a key component of many plan sponsors’ overall risk-reduction strategy.

      • Key Fault Lines in the Global Earthquake Zone

        Diagnosing and positioning for tectonic shifts in the financial markets

        Published by Prudential

        Slow economic growth. Mountains of debt. Massive central bank buying. Negative bond yields. Rising inequality. China. In this paper we look at how the failures in two major systemic areas of developed market economies–-macroeconomic and policy–-have created a third major fault line–-political risk. We review how these risks interact, why they are the keys to our most serious future financial risks, and the implications for fixed income investment strategies.

      • Passive and Active Fulfillment Choices
        Target Date Funds: Combining the Best of Active and Passive

        Published by QMA

        Recently, there has been a movement away from active management. The low fees charged by passive vehicles, coupled with the perception of poor performance by active managers, have been the primary drivers for this shift. In today’s low-return environment, investors continue to be sensitive to the impact of fees on performance. In QMA's new paper, Passive and Active Fulfillment Choices, we discuss the performance characteristics of different types of US active equity managers in the large-cap space and examine the advantages of combining a quant approach with indexing. We also consider the implications for investors in target date funds and how these fulfillment choices impact retirement savings and income.

      • High Dividend Yield Portfolios: More Popular, Yes, But What About Risk?

        Published by Axioma

        Several recent articles have cited the renewed popularity of funds composed of stocks with high dividends. These articles pointed out that as stock prices have risen, valuations have increased, and this type of strategy may be more risky because it has become overvalued. Our goal was to look at the "riskiness" of the strategy through the lens of our risk models and to test the thesis using some standard valuation measures.

      • The Pension Risk Transfer Market at $260 Billion

        Innovation, Globalization and Growth

        Published by Prudential

        This paper examines the growth of the global pension risk transfer market and how firms around the world are transferring pension risk to insurers and reinsurers. Authored by Amy Kessler, the paper explores how these transactions secure the promises made to participants while achieving financial benefits for plan sponsors. Pension risk transfer is being employed by companies of all sizes and sectors, is customizable, and can help sponsors attain a lower-risk future. Amy and her team have closed over $40 billion in reinsurance transactions since 2011, covering members of nearly 200 pension funds in the U.K. She is leading the launch of Prudential’s longevity reinsurance solutions in Canada, the Netherlands and Australia, and has twice been named to Institutional Investor’s “The Pension 40.”

      • Multiple Employer Plans: Expanding Retirement Savings Opportunities

        Published by Prudential

        Tens of millions of Americans lack access to workplace retirement plans, leaving them at-risk of not meeting their financial needs in retirement. This retirement coverage gap is most acute among employees of small businesses. In fact, nearly 50% of workers at businesses employing fewer than 100 people lack access.Find out how multiple employer plans (MEPS) can help close the retirement coverage gap and enable more workers to participate in defined contribution plans and the advantages they offer.

      • A powerful combination: Target-date funds and managed accounts

        Published by Vanguard

        The needs of DC plan participants change and evolve over time: A single target-date fund (TDF) might serve them well early on, but other options may be more appropriate later on or as circumstances change.

        The good news is that the evolving and diverse needs of changing DC populations can be addressed with two complementary options in your plan's investment menu that span the retirement-savings spectrum—TDFs and managed accounts. In A powerful combination: Target-date funds and managed accounts, authors Cynthia Pagliaro and Stephen Utkus, Vanguard Center for Retirement Research, explain how this combination can work for all your plan participants, with TDFs as an investment fundamental and plan cornerstone, complemented by managed accounts that offer customized portfolios to meet specific individual needs.

      • The Long and the Short of It: The Quant Shorting Advantage

        Published by QMA

        There is a widely held view that we are in a lower return environment with single digit returns on the horizon for equity markets. In these times, any additional return is particularly valuable. Active extension, equity long-short, and equity market neutral products can be attractive for investors at any particular time, given investors' varied investment objectives and needs. That said, each of the three categories of shorting-enabled products can help address distinct issues facing investors today. QMA’s new paper describes how short selling can allow investors to find alpha in often overlooked places, explains the three main categories of shorting-enabled equity products, and highlights the benefits of a systematic quantitative process.


          • Small Cap Perspectives: Russell 2000 Index 2Q2016 Analysis

            Market recap — Value continues its run

            Published by FTSE Russell

            The Value style continued to assert its leadership in the cycle of style performance. Index data demonstrates that, regardless of cap size, defensive characteristics —companies with less economic sensitivity and more stable earnings profiles — are showing strength for the year, as are Value companies as determined by higher relative Book-to-Price characteristics.

          • What’s in a Name?
            In the Case of Smart Beta, it's Hard to Tell

            Published by Axioma

            Do ETF buyers, especially those seeking smart beta strategies, really know what they are getting? Is it alpha? In this paper, we focus on a few types of smart beta portfolios in order to highlight similarities and differences driven by methodology. Our results suggest a number of conclusions about how investors should be thinking about the proliferation of smart beta portfolios.

          • The Ease of Automation and Guaranteed Lifetime Income

            Published by Prudential

            American workers continue to face challenges on multiple fronts when it comes to retirement planning. The retirement industry places emphasis on plan design and its importance in meeting these challenges, but are the solutions offered to plan participants on target, and if so, are participants taking advantage of these solutions? Are there plan design features that plan sponsors could use to drive better outcomes?

            Prudential Retirement commissioned a survey that asked plan participants for answers to these questions, and more. This whitepaper takes an in-depth look at the findings and suggests ways plan sponsors can collaborate with intermediaries and product providers to better meet participant needs and expectations.

          • Unearthing Opportunities in Metals and Mining. Thoughts and Bonds: Macro Views from the Janus Fundamental Fixed Income Team

            Published by Janus

            Slowing global growth, deteriorating balance sheets and U.S. dollar strength have manifested in volatility for the metals and mining sector this year. While investors in search of yield have piled into the sector of late, the Janus Fundamental Fixed Income team’s long-term view is that there will be a continued struggle with oversupply in the face of sluggish growth and a looming demand curtailment from China. Learn more in our quarterly outlook.

          • Central Banks of the World: Yield to the Markets!

            Published by Prudential Fixed Income

            While some may blame the past year's market volatility on China’s economic slowdown, falling commodity prices, or Brexit, this paper discusses the possible culpability of some overzealous monetary policies. Has the Fed been too hawkish? Are the aggressive policy steps taken by the BoJ and the ECB perhaps inflicting more harm than good? We also consider where policies are headed next and why this backdrop may be good for the bond markets.

          • Expanding the Case for Stable Value

            Published by Prudential

            What drives decision-makers to adopt stable value funds? That is the question at the heart of Prudential Retirement’s latest research paper, Expanding the Case for Stable Value: New Insights into What Drives Decision-Makers to Embrace Stable Value Funds . The paper draws on a survey of more than 700 plan sponsors and intermediaries that gathers insights into how the two groups perceive stable value. Encouragingly, the study provides evidence that growing numbers of plan sponsors and intermediaries may be open to embracing the asset class. We strongly believe that growing the stable value market is an attainable goal and that the findings and recommendations contained in this paper can provide a roadmap for reaching that goal.

          • CoCo Risk: Practical Approaches to Measuring Risk

            Published by Axioma

            CoCo (contingent conversion) bonds have seen an upsurge in the headlines lately. In a nutshell, these instruments allow banks to boost regulatory capital during periods of financial stress, but not at the expense of taxpayers; hence, these instruments mitigate the too-big-to-fail doctrine. Investors of CoCos take the brunt of losses if a bank’s capital ratio dips below a predefined level.

          • How smart beta meets different investor outcomes

            Published by FTSE Russell

            Smart beta is being used by investment institutions to address multiple requirements and to produce different types of investment outcomes. As investors’ growing interest in smart beta is driven by risk- and return-based considerations, FTSE Russell provides examples of how smart beta indexes are being used by investors in both these areas. They also illustrate investors’ current use of smart beta through case studies involving their clients.

          • China Onshore Bonds

            Published by FTSE Russell

            China’s bond market is the third largest in the world after the U.S. and Japan. There have been positive recent developments to open up the onshore Chinese bond market – The IMF approved the Renminbi (RMB) as global reserve currency in November 2015 alongside the EUR, USD, JPY, and GBP. A few months later the RMB bond market was opened to foreign investors (February 2016). This allows investors to penetrate a new market with particular traits. This paper provides insights to the onshore China bond market by comparing characteristics of the FTSE Onshore China Bond Index Series and the European government bond markets.

          • Intention versus practice: factors limiting downside protection in portfolio models

            Published by John Hancock Investments

            Key Takeaways:

            ✓ RIAs and other advisors employing model portfolios express a desire for downside protection, yet often do not implement strategies sufficient to do so.

            ✓ A justifiable aversion to duration risk may be heightening downside volatility as advisors increase allocations to flexible bond funds with greater weightings in high-yield bonds and higher correlations to equities.

            ✓ Statement risk is a commonly cited concern for advisors who avoid alternatives and other potential diversifiers in an effort to keep things simple.

            ✓ The establishment of a performance blueprint would represent a positive step toward bridging the gap between intention and practice in model portfolios.

          • Revisiting The Role of Alternatives in Asset Allocation

            Published by PGIM

            After watching alternative investments lag the stock market for seven years, many institutional investors have been rethinking their exposure to the asset class. A new study from PGIM reveals how sweeping generalities about alternative investments mask important differences in their risk and return characteristics and shows that some alternative strategies still offer investors a compelling mix of benefits.

          • The Five Myths Holding Back Plan Sponsors

            Published by Prudential

            Current trends show that plan sponsors across market sectors, geographies and plan sizes are increasingly interested in de-risking their defined benefit pension plans. Despite this heightened interest, some sponsors remain hesitant to implement de-risking solutions. Contributing to the headwinds are five marketplace misconceptions, or myths, that preclude plan sponsors from reducing the risk in their plans. This paper provides clarity on those five myths, and can help expand the range of risk reduction measures plan sponsors are willing to evaluate and employ.

          • Turning Negative Into Nothing: An Explanation of “Adjusted Factor-Based Performance Attribution”

            Published by Axioma

            Factor attribution sits at the heart of understanding the returns of a portfolio and assessing whether a manager has invested in a manner consistent with his value proposition. In this paper, we will step back and look at factor-based attribution from first principles, as well as describe a methodology that will help correct some of the underlying issues that may arise and produce misleading results.

          • More than Just a Second Risk Number: Understanding and using statistical risk models

            Published by Axioma

            Although fundamental factor risk models are more commonly used and understood by portfolio managers, statistical factor risk models provide an important alternative and adaptable view on risk. In times of unusual market movements and trends that are not well modelled or captured by traditional fundamental factors, statistical risk models can be leveraged to identify these unexpected sources of risk. This paper describes how a combination of fundamental and statistical factor risk models can be exploited in any investment process.

          • Market changes captured by annual Russell indexes reconstitution

            Published by FTSE Russell

            During the Russell indexes reconstitution event, the indexes are rebalanced to ensure that market changes that occurred in the preceding year are captured. This process involves reconfiguring the breakpoints between large, mid and small cap both in the US and globally as well as determining where each company lies along the investment styles spectrum. This year’s reconstitution marked a shrinking US market, with the total market cap of the Russell 3000 Index down by roughly 5% since last year’s rebalance. Globally, market size is down by roughly 10% since last year’s reconstitution, with the Russell Global Index now representing $55.6 trillion in total market cap compared to last year’s size of $61.5 trillion.

          • The Three Pillars of Exceptional Service Delivery

            Pillar III: Consultation and Commitment

            Published by Prudential

            This paper is the third in a series of white papers that closely examine the “Three Pillars of Exceptional Service Delivery” in a pension risk transfer agreement. As this white paper describes, executing a pension risk transfer transaction can be a multifaceted and meticulous undertaking. Partnering with an insurer that delivers a consultative, partnership-driven approach and is fully committed to exceptional customer service is vital to transaction success. Without question, the new benchmark in pension risk transfer is exceptional service delivery. This involves engaging plan sponsors and retirees before, during and after the transaction is complete. It also demands a profound awareness of the challenges facing plan sponsors and retirees today, and addresses those challenges to the customers’ complete satisfaction.

          • Rising interest rates: Weighing risk for TDF retirees

            Published by Vanguard

            In this research paper Vanguard's Matt Brancato, Scott Donaldson, and David Pakula discuss how a higher interest rate environment might impact investors who rely on target-date funds (TDFs) and other sources of income in retirement. While conventional wisdom suggests that rising rates are an unfavorable development for fixed income portfolios, including those in TDFs, the authors argue that a hike in interest rates can be a positive development for retirees, particularly if it coincides with economic growth.

          • US Listed Real Estate sectors during periods of rising rates: what history tells

            Published by FTSE Russell

            This 'Index Insights' from FTSE Russell looks at what happened to the US listed real estate market during the most recent three periods of increases in the Fed Funds rate, giving special attention to the performance of different real estate sub-sectors.

          • The FTSE China Onshore Bond Index Series

            Published by FTSE Russell

            China is now the world's largest economy (when measured by purchasing power parity (PPP)) and the largest trading nation2. The country's domestic currency bond market is the third-largest in the world, following the United States and Japan, and has been growing rapidly in recent years. The FTSE China Onshore Bond Index Series, launched in March 2015, offers investors a comprehensive set of benchmarks to measure the performance of the renminbi-denominated bond market. The index series includes fixed-rate and zero-coupon debt issued by the Chinese central government and policy banks.

          • FTSE Russell China Bond Research Report

            Published by FTSE Russell

            China opened its domestic bond markets in February 2016 to a wider range of international market participants to further liberalise the capital account and attract more foreign investment. This FTSE Russell report details recent perspectives on that market including performance of the FTSE Russell China Bond Indexes.

          • Russell Dividend Growth Index Series

            Published by FTSE Russell

            Interest among market participants is growing in "dividend growth" companies - those that pay increasing dividends over time.

            Based on an analysis of Russell U.S. index constituent data from 1987-2014, companies that regularly increased their dividend payments over a period of ten years or more returned a year-on-year average of 13.9%, as opposed to the year-on-year average 10.1% returns of companies that paid dividends but did not increase them. This paper introduces the Russell Dividend Growth Index Series, which includes U.S. stocks that have succeeded in increasing their dividend payments over a period of ten years or more.

          • Russell 2000 Reconstitution Effects Revisited

            Published by FTSE Russell

            The costs to investors of passive investing and the relative merits of transparent index reconstitution rules are important investment management topics and subjects of perennial interest to researchers and investors alike. This is particularly true regarding the Russell 2000 Index, the preeminent benchmark index for the US small capitalization equity market. This paper updates prior research on the impact of index reconstitution on the performance of the Russell 2000 Index and reviews related work.

          • The Three Pillars Of Exceptional Service Delivery

            Pillar II: Transaction And Transition

            Published by Prudential

            This paper is the second in a series exploring the “Three Pillars of Exceptional Service Delivery” in a pension risk transfer agreement. Once solely focused on the financial aspects of such transactions, plan sponsors now seek insurers who are retirement experts that devote time, attention and resources to the retiree experience.

            Authored by David Casto, Head of Service Delivery for Prudential Retirement, the paper examines how exceptional service delivery includes the ability to shed a purely operational lens and instead create a consultative relationship that results in a distinctively positive and holistic experience. The new standard in pension risk transfer, exceptional service delivery occurs before, during and after the transition, requiring a deep understanding of what plan sponsors and retirees are concerned about and experiencing.

          • Multi-factor Investing: Practical Considerations for Portfolio Managers

            Published by Axioma

            Factor-based and smart beta products have become a growing trend as investors look for ways to quantitatively expose their portfolios to certain historically successful investment themes while reducing the volatility that comes from betting on individual securities.

            The factor investing trend spawned multi-factor investment products as investors recognized that certain factors may underperform in certain market conditions and combining one or more of them can potentially limit the portfolio’s downside risk. Axioma offers its unique insights on what portfolio managers should consider when thinking about multi-factor products.

          • Stress Testing the Impact of Brexit on Bonds, Equities and Other Assets

            Published by Axioma

            How might investors be affected if the United Kingdom leaves the European Union? Here we explain how an investor may wish to distinguish between the immediate implications and long-term structural consequences of the event. We review other partially relevant historical events for guidance. Obviously, significant comparable political turning points are somewhat rare in contemporary financial markets, so finding historical precedence to assist in modeling the likely consequences for asset prices is difficult.

          • The Three Pillars Of Exceptional Service Delivery

            Pillar I: Retiree Communication and Education

            Published by Prudential

            This paper is the first in a series that explores the “Three Pillars of Exceptional Service Delivery” in a pension risk transfer agreement. Pension risk transfer was long seen as a purely financial transaction, but plan sponsors now realize an insurer’s service capabilities are just as important as its financial strength and capacity.

            As the new benchmark in pension risk transfer, exceptional service delivery requires a keen awareness of the challenges plan sponsors and retirees face—and the ability to address those challenges head-on. Authored by David Casto, Prudential’s Head of Service Delivery, the paper explores the value of providing sponsors and retirees with the information and support they need to make sound decisions and achieve peace of mind through every stage of a transaction.

          • Smart beta: 2016 global survey findings from asset owners

            Published by FTSE Russell

            FTSE Russell has published the results of its third annual survey of global institutional asset owners’ attitudes toward, understanding of and implementation of smart beta indexing. Each year, they have recruited equity decision makers from across a broad spectrum of AUM tiers and at a variety of stages in their evaluation of smart beta.

            And each year, participation by global asset owners has increased, with over 250 asset owners responding in 2016. Respondents are drawn from North America (49%), Europe (33%), Asia Pacific (13%) and Other regions (4%) and have estimated total AUM of more than $2 trillion. This is a summary of those results, for the full report-click on link.

          • Guaranteed Lifetime Income and the Importance of Plan Design

            Published by Prudential

            As the percentage of workers with defined benefit plans declines, many continue to lose a critical element of their retirement security: guaranteed lifetime income. In the quest for the best ways to address this and other challenges within defined contribution plans, Prudential Retirement has conducted a study of plan participant outcomes based on client adoption of a default investment that includes a guaranteed lifetime income solution.

            Our recent findings show that incorporating an in-plan guaranteed lifetime income solution within a plan's default investment can—when combined with auto-enrollment and auto-escalation—lead to American workers adopting even more beneficial behaviors with regard to plan participation, contribution rates and diversification.

          • Retirement: From the mind of the TDF investor

            Edward Dinucci, William Lee Norton, Michael Pan, and John Croke

            Published by Vanguard

            In this third of three brief papers, Vanguard experts present key findings from Vanguard's target-date fund investor survey, which was designed to uncover expectations and overall understanding of TDF characteristics and risks. Our analysis of the results focuses on investor's product comprehension, risk tolerance, and anticipated uses of their retirement savings.

          • Small Cap Perspectives: Russell 2000 Index Quarterly Analysis – The Gold Rush

            Market Recap Commentary – First Quarter 2016

            Published by FTSE Russell

            A 1848 the publication The Californian announced the discovery of gold at Sutter’s Mill. Two months later, the paper shutdown because its entire staff had left to prospect for gold. Two years on, the population of San Francisco had swelled from 1,000 residents to more than 20,000 and 150 years later to Q1 2016, another gold rush of sorts appeared to be underway.

            A flight to more traditional assets, following sharp declines for US equity markets during the first half of Q1, pushed the price of gold up as flows into gold-related products rose. Within capitalization categories, the Russell 2000 Index (small) and the Russell Microcap Index, experienced the most significant of the declines. Through February 11 the Russell 2000 Index was down almost 16% for the year. In glittering contrast, gold was up 17.5% over the same time period!

          • Combining Factors

            Published by FTSE Russell

            There are different ways of combining factors. A simple approach is to average stock weights across a number of single factor indexes – a composite index approach. An alternative approach to combining factors in order to achieve exposure to multiple factors within an index is to “tilt” the starting index repeatedly, each time towards one of the desired factors. Read this paper to get insight into what works best and why.

          • Getting Real Exposure:
            Implementing a Real Asset Strategy

            Published by QMA

            Real assets have found a place in the strategic asset allocation mix of most institutional investors and can play multiple roles in a diversified portfolio—including total return potential, diversification from low correlations, and inflation sensitivity. These benefits vary across the sub-asset classes, and it’s important for investors to gain a better understanding of the benefits and risk profiles of each when building the components of an overall real assets strategy.

            Adding real assets as a complement to traditional asset classes requires a well-defined investment objective, as well as a clear plan for implementation, including the size of the real assets allocation within the overall portfolio, the mix of real assets exposures, and the vehicles by which these exposures will be delivered—whether they be sourced directly, through a diversified liquid fund of real assets, or some combination of the two.

            Investors can choose to build their own real assets portfolio through a combination of direct exposures—such as direct real estate or natural resources ownership. While this approach has its merits, it requires considerable expertise and staff to manage. Liquid real assets can provide more efficient implementation for a wider range of institutional investors. Allocating to such a strategy offers greater liquidity, improved diversification, and a single fee structure. These funds also provide even the most sophisticated real assets investors new ways to complement private real asset strategies they may have had in place for decades.

          • Russell 2000 Reconstitution Effects Revisited

            Published by FTSE Russell

            The costs to investors of passive investing and the relative merits of transparent index reconstitution rules are important investment management topics and subjects of perennial interest to researchers and investors alike. This is particularly true regarding the Russell 2000 Index, the preeminent benchmark index for the U.S. small capitalization equity market. This paper from FTSE Russell updates prior research on the impact of index reconstitution on the performance of the Russell 2000 Index and reviews related work.

          • ESG - Road Blocks or the Road to Integration?

            Published by FTSE Russell

            There is a growing trend, particularly amongst larger asset owners, to consider ESG factors within core investment processes. The level of sophistication varies between markets and institutions, but the momentum is clear. This seven-page study from FTSE Russell explores some of the perceived obstacles to applying an ESG framework to the stock selection process, and sets out practical ways of achieving a successful integration.

          • Multifactor Indexes: The Power of Tilting

            Published by FTSE Russell

            In recent years, institutional investors have become increasingly convinced of the benefits of factor investing, facilitated by the creation of a variety of indexes, each focusing on a specific risk factor. The creation of these new indexes has allowed investors to access factor exposure efficiently and at low cost. However, as with any investment strategy, the return from a single-factor index will vary over time, often following different patterns.
            This paper from FTSE Russell examines alternative processes for building multifactor indexes, in order to benefit from a diversified exposure to the various source of factor return.

          • Achieving Controlled and Meaningful Factor Exposure via Factor Indexes

            Published by FTSE Russell

            A factor index has the objective of providing controlled and meaningful exposure to the factor (or factors) of interest using a transparent and consistent methodology.
            Factor indexes can serve both as benchmarks and as the basis for index-replicating financial products. As a result, index designers also need to consider levels of index capacity, diversification and turnover.
            There is a trade-off between some of these characteristics: for example, maximizing the factor exposure of the index would likely lead to excessive concentration in a few stocks; and maintaining high levels of factor exposure through more frequent index reviews has implications for index turnover.
            This ‘Index Insights’, the third in a series of four from FTSE Russell on factors and alternatively weighted indexes, looks at how an index can be designed to provide controlled exposure to a factor.

          • Alternatively Weighted and Factor Indexes

            Categorization of smart beta

            Published by FTSE Russell

            ISmart beta is a term that covers a wide range of systematic, index-based investment strategies in the equity markets and, increasingly, in other asset classes. Smart beta indexes depart from the standard index construction methodology of weighting constituents by their market value (capitalisation).
            FTSE Russell distinguishes two types of indexes:

            • Factor indexes, designed to reflect the performance of factor risk premia in a transparent, rules-based and replicable format;
            • Alternatively weighted indexes, designed to achieve specific index level objectives such as greater levels of diversification or lower levels of volatility.

            This ‘Index Insights’, the second in a series of four from FTSE Russell on factors and alternatively weighted indexes, explores the differences between alternatively weighted and factor indexes.

          • Factors and Factor Exposures

            The rise of interest in factors

            Published by FTSE Russell

            Interest in factors is on the rise amongst investors. Consulting firm PWC1 recently forecast a tripling of the assets under management in index-based investment strategies worldwide between 2012 and 2020, and suggested that factor investing would be a key part of this trend. According to PWC:
            “The growth of passive strategies fueled by new innovations in this space, such as factor investing...factor investing will ‘cross over’ from the realm of active managers, through highly sophisticated institutional passive investors, and into the mass-market retail space”.
            This ‘Index Insights’, the first in a series of four from FTSE Russell on factors and alternatively weighted indexes, defines what factors are and how factor exposure is measured.

          • Stronger Banks Weather a Challenging Environment. Thoughts and Bonds TM : Macro Views from the Janus Fundamental Fixed Income Team

            Published by Janus Capital Group

            Some of the recent financial market turbulence has been concentrated in financials, especially European banks. Given the important role these institutions play in allocating capital, their health – or perceived health – is a matter of importance for both the economy and investors. Despite the recent volatility, the Janus Capital Fundamental Fixed Income team sees some encouraging developments with regard to the sector’s growth prospects and capital position. This report explores the latest Thoughts and Bonds TM for the quarter ahead.

          • Emerging Markets: Time to stay invested or pull back?

            Published by QMA

            The recent turmoil in global financial markets was caused by a number of market events and systemic factors. QMA’s latest Insights paper attempts to separate what we already knew, what we didn’t know, and what we should know about Emerging Markets economies and their outlook, as well as some insights on how quantitative strategies can effectively capture return dynamics in the current market environment. We don’t think it’s time to give up on Emerging Markets. Yes, they have changed, they have evolved, and they have slowed down, but they remain the engine of growth for the world. To be able to capture this long term potential, investors should look through the noise created by negative retail flows and sensational reports in the news that see contagion and crises around every corner.

          • Performance Consistency in International Equities—The Advantage of an Adaptive Quantitative Approach

            Published by QMA

            We describe how a bottom-up, quantitative investment process may be well suited to deliver consistent positive excess returns in international equity markets by focusing on two key elements of the investment process: a) a stock selection model that captures the long-term drivers of future returns via firm fundamentals, and b) the use of rankings generated by that stock selection model to construct portfolios that seek to deliver predictable alpha and beta returns. We will also discuss the behavioral biases that can affect security prices in international equity markets, and how a sector based, adaptive weighting model to capture and exploit these biases can be effective.

          • A Silver Lining: The Investment Implications of an Aging World

            Published by Prudential

            For the first time in recorded history, the old will outnumber the young. This unprecedented aging of the global population has profound consequences for individuals, businesses, governments, and investors. For PGIM’s new white paper, A Silver Lining: The Investment Implications of an Aging World, over 30 PGIM and Prudential Financial, Inc. experts were gathered to debate the most striking demographic trends, the likely winners and losers across different sectors in the economy, and the most attractive investment themes arising from the longevity mega-trend. With global aging under way, and accelerating, now is the time for investors to consider capitalizing on the opportunities.

          • Less than Zero: The Impact of Negative Rates in Japan

            Published by Axioma

            When the Bank of Japan announced in late January 2016 it would move rates into negative territory as part of its continuing quantitative easing program, the expectation was that the move would boost confidence that the Japanese economy would start to show more signs of recovery. Investors seemed to believe otherwise and moves in several financial instruments suggested that concerns about the Japanese economy had increased. In this paper, we will show some of the factors Axioma perceives through its risk-analysis lens that point to these heightened concerns.

          • How to Model the Impact of an Interest Rate Rise On Bonds

            Published by Axioma

            An interest rate increase is imminent, according to U.S. Federal Reserve Chair Janet Yellen.

            The question is, how will the increase—or similar increases by other central banks—affect portfolio holdings?

            Can the potential impact be modelled?

            Axioma believes it can, and in this paper we provide a framework...

          • Next Generation Risk Mgmt Solution....Now

            Published by Axioma

            The impact of the global financial crisis continues to reverberate, even seven years out. Regulators and chief risk officers warm. The Fed scrutinizes. Investors demand transparency and answers. While initial efforts to manage risk focused mainly on oversight, increased “policing” is clearly only part of the answer. The reality is inescapable: the term “risk management” has taken on an entirely new meaning, in terms of functionality, scope and influence. Once considered largely a diagnostic tool, risk management must now become preventive medicine.

          • Risk Tolerance: From the mind of the TDF investor
            Part 2: Insights from our target-date fund (TDF) survey

            Published by Vanguard

            In this second of three brief papers, Vanguard experts present key findings from Vanguard's target-date fund investor survey, which was designed to uncover expectations and overall understanding of TDF characteristics and risks. Our analysis of the results focuses on investor's product comprehension, risk tolerance, and anticipated uses of their retirement savings.

          • Product comprehension: From the mind of the TDF investor
            Part 1: Insights from our target-date fund (TDF) survey

            Published by Vanguard

            In this first of three brief papers, Vanguard experts present key findings from Vanguard's target-date fund investor survey, which was designed to uncover expectations and overall understanding of TDF characteristics and risks. Their analysis of the results focuses on investor's product comprehension, risk tolerance, and anticipated uses of their retirement savings.

          • The Totally Mad World of Low Rates

            Published by Prudential Fixed Income

            While it was fashionable earlier this century to talk about how interest rates had returned to the levels of old thanks to an unwind of the 1970s demographic wave and a return to low inflation, the fact is we've now entered a different world where rates are not just low, but ultra-low—even negative in many cases. This thought paper explores our view that rates will stay ultra-low not only because inflation is low, but also because of the high levels of debt across the worlds' developed economies, which in turn have depressed growth, and the equilibrium level of rates.

          • Decelerating Growth, Rising Risks: Fundamental-Informed Macro Views

            Published by Janus Capital Group

            The Janus Fundamental Fixed Income team sees the outlook from management teams as one of caution. The dollar has shifted from a tailwind to a headwind for exporters. The appreciating currency is making U.S. exports less competitive, thus weighing on revenues. In addition, low energy prices have led to tightened budgets and job cuts within the sector. Finally, consumers – the largest segment of the U.S. economy – have been reticent to spend their “gasoline dividend.” This report explores the latest Fundamental-Informed Macro Views from Janus Fixed Income for the quarter ahead.


            Published by Morningstar

            America is facing a retirement crisis as a growing number of workers near retirement age without having adequate pensions or savings to guarantee a comfortable living after their employment ends. A new white paper from Morningstar Associates, LLC called “Working Together to Solve the Retirement Challenge” analyzes these demographic and investment planning issues and offers possible remedies.

            This free report, attached, proposes five actions employers can take now to help their workers make better preparations to address the retirement planning dilemma.

            Morningstar Associates, LLC is a registered investment advisor and is a wholly owned subsidiary of Morningstar, Inc.

          • Hedge Fund Compliance
            Building a Best-Practice Framework

            Published by SS&C Advent

            Regulatory compliance and investor transparency are now the order of the day for hedge funds. And a strong culture of compliance can be a clear competitive advantage in winning over institutional investors. This white paper outlines the key regulations affecting hedge funds, what examiners will most likely be looking for in an audit, and a best-practice technology framework for meeting compliance requirements.

          • Expanding the Case for Stable Value

            Published by Prudential Retirement

            What drives decision-makers to adopt stable value funds? That is the question at the heart of Prudential Retirement’s latest research paper, Expanding the Case for Stable Value: New Insights into What Drives Decision-Makers to Embrace Stable Value Funds.

            The paper draws on a survey of more than 700 plan sponsors and intermediaries that gathers insights into how the two groups perceive stable value and addresses key findings that include:
            • The factors that drive plan sponsors and intermediaries to recommend stable value
            • The top characteristics that drive plan sponsors and intermediaries to adopt stable value
            • Key issues that keep some sponsors and intermediaries from adopting stable value funds

            Encouragingly, the study provides evidence that growing numbers of plan sponsors and intermediaries may be open to embracing the asset class. We strongly believe that growing the stable value market is an attainable goal and that the findings and recommendations contained in this paper can provide a roadmap for reaching that goal.

            Insurance products are issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, or The Prudential Insurance Company of America (PICA), Newark, NJ. Retirement products and services are provided by PRIAC. Both are Prudential Financial companies. Each company is solely responsible for its financial condition and contractual obligations. © 2016 Prudential Financial, Inc. and its related entities. Prudential, the Prudential logo, the Rock symbol and Bring Your Challenges are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.0287140-00001-00

          • Restructuring for Profitability:Analysts predict opportunities and challenges for global capital markets institutions through 2020

            Published by Broadridge

            Global capital markets institutions are less at risk from a financial crisis than they were before 2008, but regulatory pressures are set to intensify dramatically over the next five years. While profits are recovering, banks will continue to struggle to beat their cost of equity capital. In order to meet the challenge, banks will need to aggressively restructure and cut costs, according to a first-of-its-kind survey of nearly 150 buy-side and sell-side equity analysts covering the capital markets industry.

            The global survey of analysts captures their collective wisdom about an industry undergoing broad transformation. The results show that while regulations have had a significant impact to date and banks have taken great strides to improve their businesses, more aggressive action will be needed in the coming years.

            Analysts favor cost-control and restructuring—above topline growth and balance sheet management—to address RoE pressure and valuations over the next five years. The main opportunities for cost-savings will come from adopting new technology in the back office and middle office, process reengineering within these functions, and mutualizing operations. The survey exposed a strong sentiment among analysts that banks over the past five years have not done enough to deploy technology and reengineer their operations to become more efficient and recover lost profitability.

          • Women versus men in DC plans

            Published by Vanguard

            Women are 11% more likely than men to participate in workplace savings plans, yet men in aggregate have account balances that are 50% larger than those of women, according to Vanguard research. However, the rising adoption of automatic enrollment is mitigating differences between men and women in participation and saving rates, as well as investment holdings. In this paper, Jean Young explores the reasons for such gender differences and the investment behavior than plan sponsors can encourage to increase plan contributions and more diversified investment portfolios.


            Published by Prudential

            Executing a pension risk transfer agreement enables plan sponsors to mitigate or entirely remove future risk from their pension plans. While accomplishing such a transaction requires significant coordination among several stakeholders, it can be a straightforward experience by following a structured process and partnering with a skilled insurer.

            Whether a transaction is impending, in the foreseeable future, or only being contemplated, there are steps plan sponsors can take today to ensure the process goes seamlessly when and if a solution is implemented.

            This paper focuses on the “how” of completing a transaction. It outlines the steps involved in the most comprehensive form of pension risk transfer: a buy-out transaction. The paper describes the three basic types of buy-outs:

            • A full buy-out, whereby the plan is terminated and an annuity is purchased for all participants;
            • A partial buy-out with a lift-out, in which an annuity is purchased for specific liabilities only (typically retirees); and
            • A partial buy-out with a spin-off, which involves transferring a segment of participants to a separate plan (the spin-off plan). The spin-off is then terminated and an annuity is purchased for all participants in the spin-off plan.

            Once a strategy is selected, the transaction process begins, which the paper outlines in four phases: preparation, feasibility, structure and refinement, and execution. The amount of work required for each phase varies based on the size and complexity of the transaction.

            Given the many high-profile transactions that have occurred, as well as the improved funded status plans have experienced by transacting, plan sponsors may now find their boards of directors eager to understand the process and costs of buy-out solutions. What’s more, plan sponsors can begin preparing by getting their data and governance process in order, and conducting initial high-level feasibility assessments of potential risk transfer agreements.

          • Are Target Date Funds Always On Target?

            Published by QMA

            For the average US worker, the goal of investing is to build a source of retirement income. One of the appeals of target date funds is the reassuring certainty communicated by success probabilities, and for plan sponsors, it is a critical measure during the selection and monitoring process. Although an important metric, success probabilities should not be taken as the final word on lifecycle investing. To be compelling, a success probability must be updated regularly to reflect the evolving participant makeup and changing economic environments. Fiduciaries need to better understand how these measures are calculated and target plan providers need to communicate the sensitivity of their estimates to different assumptions. These simple steps would go a long way to transforming the success probability from a descriptive characteristic to a useful planning tool. With these goals in mind, this paper looks at how the probability of success is measured and its relationship to the choice of expected return inputs, examines the sensitivity of income expectations to different return assumptions, and finally considers the outlook for asset class returns. We conclude that in today's lower return environment, assumptions may need to be revised and probabilities of success adjusted to reflect changing expected returns.

          • Declaring Independence With Your IBOR
            The Independent Investment Book of Record Sets a New Standard for Institutional Investors

            QED Financial Systems

            Regulatory, operational and competitive demands are tougher than ever. There’s no question that IBOR (investment book of record) provides the transparency needed to meet them, but it is only as effective as its information quality. Without independent data management, accounting and reconciliation, how can you be sure yours is the most comprehensive, accurate and timely book of record available? What are the risks? And how can you minimize them? This white paper examines the challenges of today’s investment management environment and how the independent IBOR can help overcome them while reducing risk and cost.

          • Tomorrow’s Investment Rules 2.0:
            Emerging risk and stranded assets have investors looking for more from nonfinancial reporting

            Published by EY

            Today more than ever, investors tell us that they’re using companies’ nonfinancial disclosures to inform and underpin their investment decisions. This is understandable, since we increasingly see cases where companies’ intangible assets outvalue their tangible assets. Central to the discussion of value is data on environmental, social and economic sustainability performance. However, despite clear indicators of interest from the investor base, many organizations still fail to meet emerging investor expectations regarding their reporting in these areas.

            Can responsible and resilient companies improve their disclosures to help attract capital? With the risk of environmentally stranded assets taking center stage for resource companies, in particular, can disclosures be improved in ways that increase market understanding and highlight purpose-led business practices?

          • How Can You Help Your Employees Retire?
            Choosing the Right Investment Solution Makes a Difference

            Published by Morningstar

            You’ve read the headlines about retirement: employees aren’t prepared and employers aren’t confident. Retirement is in trouble.

            But the path toward solving the problem isn’t well-defined. How can plan sponsors assist employees who are unsure about what the future holds? They can help participants reach their retirement goals by making sure their 401(k) plan features the right benefits. Employers have choices. We analyze three investment options and evaluate the merit of personalized portfolios to help answer the question: “What’s the right choice to help my employees retire?”

          • Managing Risk in a New World
            Navigating the five major hurdles for hedge funds

            Published by SS&C Advent

            In the face of new, more stringent regulations worldwide, hedge fund managers are compelled to respond to more complex reporting requirements and investor demand for greater transparency, while trying to demonstrate that they have adequate risk controls in place. This white paper looks at five major hurdles to risk management and suggests a best practices IT framework that can help hedge funds manage risk more effectively in this new environment.

          • Perspectives on Retirement

            Published by Prudential

            Recent research by Prudential and others has found that millennials tend to be more risk averse and sensitive to market volatility than their generation X and baby boomer counterparts. This tendency to take an overly conservative approach to investing may result in a generation that is ill-prepared for retirement due to insufficient accumulation of assets. Prudential believes that to lessen this risk, millennials should look to equities. Equities have historically outperformed bonds and have generated strong returns over rolling 30-year periods. And, the average equity return is double that of the average bond return. With 30 years or more until retirement, equity market fluctuations can work in millennial investors’ favor, provided they make consistent and appropriate contributions to a retirement portfolio – and do not let emotions sway their investment decisions.

            One way to go about this is through the use of target date funds, which can help bridge the gap between young investors’ willingness and ability to take on more risk. And, importantly, target date funds automatically become more conservative as an individual draws nearer to his or her target retirement date. By starting to save now, saving more, and allocating a higher percentage to equities early on, millennials stand a better chance of achieving a successful retirement.

          • Global equity: Prospectus benchmarks the correct barometer?

            Published by Vanguard

            When evaluating the performance of an active manager, investors often assume that the benchmark used to compare performance is an accurate reflection of the goals, risk posture, or opportunity set of the strategy. But it isn't always the case that an appropriate benchmark will be selected as active managers may shift their exposure to more risky segments in an attempt to generate better long-term returns for investors.

            In this research paper, Vanguard Investment Strategy Group's Josh Hirt, Ravi Tolani, and Chris Philips explain why custom-created benchmarks may be a more reasonable proxy of active performance than a fund's prospectus benchmark.

          • RMBS After the Flood: A Second Look at Legacy Assets

            Published by Prudential

            Over the past seven years, non-agency RMBS have delivered standout performance, but as spreads have tightened, investors have increasingly questioned whether value remains in this opaque and historically tainted asset class. In this paper, Mr. Vibert explains why his response to this question is an emphatic “yes.”

          • The Search for Yield – Global Real Estate Themes & Investment Opportunities

            Published by Prudential

            The backdrop for real estate investors in today’s market is a global economy characterized by improving underlying growth prospects and a highly supportive policy environment. Risk appetite is rising and transaction volume is being boosted by increased cross border deal flows and growing popularity of large portfolio transactions. Prime yields have moved below pre-crisis lows in a number of major markets, but could fall further in today’s low interest rate environment. The “search for yield” is intensifying as investors find it increasingly difficult to source assets that fulfill their return requirements. In this paper, Prudential Real Estate Investors identifies key market themes that are shaping the outlook for global property markets, and the resulting opportunities for investors seeking attractive risk-adjusted return opportunities in today’s markets.

          • Strategic Beta Strategies: An Evaluation of Different Approaches

            Published by Schwab Center for Financial Research®

            The last several years have seen a proliferation of strategic beta strategies. “Strategic Beta Strategies: An evaluation of different approaches,” analyzes the different types of strategic beta strategies available in the market today.

            It provides a high-level comparison of their weighting methodologies and explores the biases or tilts introduced as a result of each methodology. In addition, it covers key levers to consider when implementing these types of strategies.

          • How America Saves 2015

            Published by Vanguard

            How America Saves 2015 is a comprehensive report that analyzes the saving, investing, and account activity trends in defined contribution (DC) plans at Vanguard. The report offers useful insights into current issues affecting DC plans, including employer contribution trends, automatic plan features, use of target-date funds, and use of advice services..

            Most importantly, this article identifies and dispels several myths that are precluding some plan sponsors from taking action to de-risk their plans.

          • Rethinking Target-Date Fund Design: Managing Participant Risks

            Published by Prudential

            "Rethinking Target-Date Fund Design: Managing Participant Risks" outlines the research and philosophy underpinning Prudential's Day One SM Funds suite of target-date funds, specifically highlighting the suite's two distinct glidepaths. Specifically, the white paper discusses how the Day One Funds were constructed to help mitigate major risks that all investors face - investment risk, inflation risk, sequence of returns risk, and especially longevity risk. It explains how the suite's glidepaths were designed to address increased longevity, as well as the benefits of diversification and the inclusion of alternative asset classes.

            With over 85 years of experience working with thousands of retirement plans, millions of plan participants, and leading investment managers, Prudential’s Day One Fund suite is a reflection of our belief that we have the insight and commitment to help participants reach their Day One of retirement with confidence.

          • The 5 Myths of Pension Risk Transfer

            Published by Prudential

            Twice since 2000, America’s corporate defined benefit (DB) plan sponsors have seen their plans’ funded status deteriorate over 30% in market downturns. These declines have strained plan sponsors' finances, and compelled the 100 largest U.S. corporate pension plans to make over $550 billion in pension contributions between 2002 and 2013. Pension shortfall, potential cash contributions over time, and rising stakeholder concern over financial statement volatility and reduced strategic flexibility are making many firms consider strategies to reduce their exposure to pension plan risk—or in some instances, divest it altogether.

            This article examines the driving forces behind the intensifying interest in pension risk management solutions. It explores how accounting transparency, regulatory changes and increased scrutiny by shareholders and analysts are contributing to the trend of pension de-risking, and how finance executives’ awareness of—and interest in—pension risk management remains high.

            Most importantly, this article identifies and dispels several myths that are precluding some plan sponsors from taking action to de-risk their plans.

          • Target-Date Fund Adoption in 2014

            Published by Vanguard

            In 2014, the use of target-date funds (TDFs) in defined contribution (DC) plans continued to grow rapidly. At the end of last year, 88% of plans offered a TDF, 64% of all participants were invested in the funds, and the funds accounted for 41% of total plan contributions.

            In Target-date fund adoption in 2014 , a new research note from Vanguard Center for Retirement Research, you’ll get the latest statistics on TDFs. Author Jean Young also examines some key reasons why TDFs continue to reshape investment patterns in DC plans, including their simplified approach to investment decision-making and portfolio construction, the growing use of automatic enrollment, and their designation as a qualified default investment alternative.

          • Frontier Market Bonds

            Published by Aberdeen

            The development of the emerging market debt universe over the past decade has led many investors to seek to further diversify their portfolios into the next generation of emerging markets known as “frontier markets.”

            Coined in 1992 by the International Finance Corporation, “Frontier Markets” are a small part of the overall emerging market universe. Like mainstream emerging markets, frontier markets are considered to be developing economies with favorable growth dynamics and, in general, moderate debt levels. Frontier economies are, however, associated with higher levels of political and governance risks compared to their emerging market peers. Furthermore, frontier markets are largely underdeveloped with little financial intermediation. Access to international capital markets has improved in recent years, as evidenced by the increased Eurobond issuance, but frontier countries tend to be more reliant on multilateral institutions and international donors for financing. To compensate for these additional risks, frontier market debt is often associated with relatively higher return prospects compared to the wider bond universe.

          • Governance Process For Evaluating Sustainable Investing: A Guide for Non-Profit Fiduciaries

            Published by Russell Investments

            Sustainable investing is becoming a highly contested issue for many non-profit organizations. Because fiduciaries are in the hot seat on this issue, it's critical that they decide on and proactively document the approach they are going to take regarding whether or not to incorporate sustainable investments into their investment program.

            Download this research paper to help your organization:

            ✓ Determine motivation: What are the benefits, and drawbacks, of pursuing sustainable investing?
            br /> ✓ Define objectives: What is the objective of pursuing sustainable investing?

            ✓ Identify stakeholders: Whose opinions does your organization need to consider in determining whether there is to be a program, and if so, what type?

            ✓ Consider potential risks/costs: What is the potential impact, if any, on the overall investment program?

            ✓ Evaluate implementation considerations: What does your organization need to understand and account for if it’s decided that a sustainable investing program should be implemented?

          • The Search for Alpha: Emerging Markets Small Cap

            Published by Quantitative Management Associates LLC

            As one of the most mispriced asset classes, emerging markets small cap provides an abundant source of alpha for investment managers. Download this research paper to learn how to unlock this opportunity.

            Download this research paper to discover:
            ✓ Why emerging markets small cap stocks offer investors an attractive combination of return potential and risk reduction.
            ✓ How to capitalize on a breadth of opportunity by exploiting market mispricing.
            ✓ Additional return opportunities that could be missed by managers relying solely on research insights for a small subset of companies.

          • Vanguard's economic and investment outlook

            Published by Vanguard

            Global economic growth is expected to remain frustratingly fragil for some time, with long-term trend growth in the major economies significantly slower than during past decades, according to Vanguard's newly released Economic and Investment Outlook. The U.S. economy will likely remain resilient with anticipated growth above trend in the new term, but it won't be immune to the recessionary and deflationary risks facing Europe and the downward shift in China's economy.

          • Asset Allocation and Fund Performance Of Defined Benefit Pension Funds in the United States Between 1998-2011

            Published by NAREIT

            This CEM study sponsored by NAREIT analyzes cost and performance data from over 300 defined benefit plans

            CEM is an independent provider of cost and performance benchmarking analysis for pension funds, endowments and foundations. Its study on defined benefit plan asset allocation and fund performance, provides direct comparative insights on realized net investment returns and management fees for 12 different asset classes, including traditional stock and bond funds and real and alternative assets.

          • Emerging Markets: Countries and Companies Matter

            Published by Charles Schwab

            China and other emerging markets represent significant investment opportunities. There are also a number of risks, including geopolitical risks, economic uncertainty, currency fluctuations, and a lack of open and regulated financial markets. The challenge for investors is how to efficiently access these markets.

          • A Closer Look at Calls

            Published by Prudential Fixed Income

            Although high yield bonds and bank loans can provide investors with attractive yields, an issuer’s option to call these instruments increases the challenge of accurately analyzing the accompanying risks. In this paper, Prudential Fixed Income discusses the value of modeling the embedded optionality in high yield bonds and bank loans: why it has become more relevant in the current environment, scenarios where it can be particularly useful, and how such a model can improve relative value analysis within the leveraged finance markets.

            This paper is the second in a two-part series, the first of which discusses the framework Prudential Fixed Income uses to account for the additional risk of callable high yield bonds and bank loans. The framework considers both interest rates and spread movements,as well as issuer defaults.

          • A Case for Active Asset Allocation

            Published By QMA

            We think that active asset allocation, a strategy that rotates among asset classes based on expectations of return and risk, can offer some investors a more attractive overall portfolio option than a static or formulaic approach. In our view, the major problem faced by asset allocators is that the asset class with the highest historical real return, equities, has an annoying tendency to provide highly negative returns periodically. We suggest that a strategy which focuses on trying to avoid big losses while harvesting the high average real returns of risky assets might provide a better combination of return and risk than a static 60% stocks, 40% bonds portfolio, and we present some evidence to support this contention.

          • Advanced Beta Comes of Age

            Published by State Street Global Advisors

            Departing from the traditional cap-weighted index model, Advanced Beta is indexing re-engineered on a variety of underlying risk factors.

            Based on a survey of 300 institutional investors throughout North America and Europe, State Street Global Advisors’ research report Beyond Active and Passive: Advanced Beta Comes of Age explores the potential benefits and challenges of Advanced Beta investing.

          • Fiscal Year 2013 Performance Drivers

            Published by Russell Investments

            At the start of fiscal year 2013, five years after the global financial crisis, endowment and foundation (E&F) portfolios had, for the most part, recovered their pre-crisis portfolio values, having benefited from double-digit returns in fiscal years 2010 and 2011 and the relatively flat fiscal year 2012.¹ Today, in the face of persistent macro uncertainty and the search for high-return-generating strategies amid a low to (likely) rising interest rate environment, understanding how your peers are positioning their portfolios can be particularly useful as you seek to ensure that your own portfolio exposures are well managed and that the total portfolio is best positioned to achieve long-term return objectives.

            This paper offers a short commentary on fiscal year 2013 results for E&Fs, including median returns, dispersion, asset allocation, and manager selection.

          • New York Non-Profit Revitalization Act

            Published by Russell Investments

            The New York State Legislature recently passed the New York Nonprofit Revitalization Act of 2013 (“Act”) to overhaul the state’s non-profit laws, in the first major revision in more than 40 years. If signed into law, the Act is expected to go into effect July 1, 2014. The Act aims to eliminate administrative red tape that is confusing and burdensome to non-profits and that often prompts New York–based non-profit organizations to incorporate in another state with more favorable laws, such as Delaware.

            This Russell Practice Note discusses the changes, implications, and potential actions required for non-profit organizations following New York’s legislative changes to non-profit corporation law.

          <> <><>

          <> <>