Asset Allocation / Diversification
Rethinking Bond Index Weightings and Concentration Risk
The ISSG's Ralph Goldsticker and Mellon Capital's Lowell Bennett discuss the concentration risks in issuance-weighted government bond indexes, at a time of high sovereign debt, and suggest ways of constructing more efficient bond portfolios to mitigate those risks.
A Radical Proposal for a Square Root Recovery: Don't Forget the Right Tail
Amid nervous markets, BNY Mellon's ISSG commentators warn that investors focused exclusively on downside risk might be selling cheap assets to buy expensive ones, while foregoing possible upside opportunities.
The Power of Expectations: Aligning Asset Allocation with Macro Regime Changes
BNY Mellon's Investment Strategy and Solutions Group argues that adjusting asset class exposures as growth and inflation expectations shift has the potential to improve risk-adjusted returns for asset allocation approaches.
Is Hedging the New Diversification?
ISSG Senior Investment Strategist Bob Jaeger discusses the differences between diversification and hedging, warning that investors sometimes underestimate the costs of hedging, while overestimating the protection provided.
Burnin' Down the House: Straight Talk on Tail Risk
ISSG Senior Investment Strategist Ralph Goldsticker argues there is no portfolio equivalent of fire insurance that will protect all investors at the same time for a reasonable price. He discusses how tail risk hedging works, the trade-offs involved, and how the costs are determined.
Private Market Opportunities in Distressed Debt
Private equity specialists from Siguler Guff discuss historic opportunities in distressed debt, as the unwinding of the huge debt overhang in advanced economies is leading to pockets of forced selling at depressed valuations.
Public and Private Real Estate: Room for Both in a Diversified Portfolio
Urdang argues for both public and private real estate allocations in a diversified portfolio, citing research suggesting that each type potentially offers a different short-term benefit or strategic strength, depending on the market cycle.
The Great Recapitalization: Maturing Mortgage Debt Wave Creates Value Opportunities
Urdang discusses historic opportunities in the commercial real estate market as about $1.7 trillion in debt is set to mature over the next four years, with property value declines and high delinquency rates in CMBS creating potentially attractive buying opportunities.
Emerging Markets Local Currency Debt: Capitalizing on Improved Sovereign Fundamentals
Standish makes the case for investing in local currency emerging market bonds, citing improved sovereign fundamentals, diversification benefits and the potential for generating equity-like returns without taking on direct equity risk.
Investing in Debt: Opportunities in Secured Bank Loans
Alcentra make the case for investing in secured bank loans, arguing that the highest new issue credit spreads and strongest deal structures in over a decade offer historic opportunities to seek absolute returns in high single digits.
Fixed Income Absolute Return Amid Sovereign Debt Uncertainty
Paul Brain, Newton's investment leader for fixed income, and Colm McDonagh, head of emerging market fixed income at Insight, discuss the potential benefits of fixed income absolute return approaches against the backdrop of low interest rates, heightened market volatility, and sovereign debt concerns.
Managing Cash to Its Full Potential
BNY Mellon's Cash Investment Strategies sets out a cash-tiering approach aimed at helping investors satisfy their short-term liquidity needs while allowing for the potential to enhance returns and better manage risk.
The Case for Active U.S. Large Cap Value Equities
Investment professionals from The Boston Company argue that attractive valuations and improving company fundamentals are creating a positive environment for investing in U.S. large cap value stocks, after the asset class was out of favor for the past few years.
Trading Benchmark Choice and Transition Management Performance Attribution
BNY Mellon Beta Management examines the implicit costs involved in changing the asset allocation of a portfolio or switching asset managers in a paper first published in the Journal of Investing.
Mitigating Investment Risk With Central Beta Exposure Managers: Six Case Studies
As more investors look to derivatives to implement innovative investment strategies, Mellon Beta Management discusses the potential advantages of working with experienced central beta exposure managers who specialize in risk management and the efficient implementation of derivatives programs.
New Approaches to Global Currency Management
With the rise of global investing, Pareto argues that a well-defined currency hedging policy that distinguishes between currency translation risk at the total portfolio level and currency alpha risk in an alternatives allocation is more important than ever.
Positioning Portfolios to Manage Inflation Risk with Real Assets
While economists are still arguing about whether inflation or deflation is the bigger short-term risk, the Investment Strategy and Solutions Group believe institutions should take the time now to consider how well positioned their portfolios are to manage the longer-term threat of rising inflation. August 2010.
The Case for Investing in Municipal Bonds
Even as state and local governments in the U.S. grapple with serious fiscal challenges, Christine Todd and David Belton of Standish's Tax Exempt Fixed Income Group argue there are attractive opportunities in the municipal bond market, especially in areas such as essential service revenue bonds.
more [+]A Guide to Global Real Estate Investment Options
