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Aspects Articles
Structured Products in a Post-GFC World
For the retail investor, structured products have not only weathered the GFC storm, but also become increasingly attractive in its aftermath. Among the benefits of structured investments are their capital protection facilities (in some cases), their potential to earn higher yields than fixed deposits, and their use as a means to reduce market risk exposure.
They can also be designed to benefit from current market trends, linking them to the performance of a suite of benchmarks including interest rates, equity markets, commodities, corporate credit or foreign exchange markets.
Interest in structured products has grown as investors focus on capital preservation strategies and move away from inflexible products no longer relevant in an increasingly volatile investment environment.
Investment Consultants and Responsible Investment Study
More than half of European institutional investors are now utilising consultancy services. Environmental, social and governance (ESG) matters are a part of this trend as they begin to form a piece of the investment consultants’ agenda due to growing investor demand, which is mostly driven by corporate pension funds, public pension funds and family offices and high net worth individual investors. This study shows that service development relating to responsible investment (RI) is a recent phenomenon among investment consultants but one that is rapidly growing. The survey uncovered the emergence of boutique firms that are focused completely on RI advice and found that service development will remain a key facet to monitor as it is unclear how newer or established firms will best respond to the growing demand for ESG advisory services. It also found that there are a few important barriers to address and hence push the ESG advisory market forward even faster than predicted today.
Is it Different This Time?
During extraordinary market conditions of all kinds – good and bad – it is usual to hear people say, “It’s different this time.” In this historical journey of economics, Gregory Curtis of US advisory firm Greycourt tries to uncover whether this time around, it really is different. Every market environment is different from every other market environment, but Curtis said what people are saying is that market conditions today are so exceptional, so completely unprecedented, that investors need to reassess everything they thought they knew about the investment process – or face serious consequences. We heard this during difficult environments like the Great Depression, 1974, 1987, 2002, and we’re hearing it again today. But it wasn’t different on any of those occasions as Curtis demonstrates that investors who kept their wits about them and continued to follow traditional, thoughtful investment strategies were well-rewarded in every case.
Instalment Warrant Amendments: Implications for SMSF 'Develop and Hold' Strategies
Instalment warrants facilitated geared investments by SMSFs in real property, including development activities as part of a ‘develop and hold’ strategy. However, on 26 May 2010, the Superannuation Industry (Supervision) Amendment Bill 2010 (“Bill”) was introduced into parliament proposing to amend the Superannuation Industry (Supervision) Act 1993 (“SIS Act”) in order to reduce perceived prudential risks relating to the use of instalment warrant arrangements. In this paper, James Meli of Binetter Vale Lawyers argues that if passed in its current form, the Bill will have major implications for instalment warrant arrangements and geared self-managed superannuation fund (“SMSF”) investments in real property specifically.
Risk and Style Characteristics of Chinese Funds
This paper examines the holdings data of various active funds in China to analyze their risk and style characteristics over the last five years. We show that fund managers were quick to increase their equity exposure at the beginning of the bull market, and they started to cut their equity exposure before the 2007-2008 bear market arrived. In terms of style, we find that funds had tilts toward momentum and small caps, but away from value.
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