Investors must recognise that the economic world has changed and not expect normal asset price reversion in the future, says Carl Hess, Watson Wyatt’s global head of investment consulting.
Sweden’s first four buffer funds, with combined assets of SEK 690.6 billion (US$83 billion) have demonstrated a lack of tolerance for companies that continue to breach ethical guidelines despite the funds’ governance efforts to bring about change, excluding 10 companies from their investment universe.
The International Corporate Governance Network (ICGN), with members from 47 countries responsible for global assets of US$15 trillion, has urged the International Accounting Standards Committee (IASC) to prioritise investors, not auditors, as the key stakeholders in the setting of global financial reporting standards.
In an exclusive interview, Amanda White, editor of top1000funds.com, talks to the modern portfolio theorist about markets, portfolio rebalancing, Madoff and more.
Government efforts to defend economies from the global downturn – primarily official interest rate cuts and spending packages – could make inflation a significant threat to investors’ portfolios once the crisis has run its course, according to Urs Wietlisbach, executive vice chairman of Partners Group, a CHF24 billion (US$21 billion) alternatives manager.
In a research paper entitled “Tumbling Tower of Babel: Subprime Securitization and the Credit Crisis” in the latest Financial Analysts Journal, Bruce Jacobs argues that highly complex financial instruments, were devised to shift risk from one part of the financial system to another, but the underlying systematic risk remained. And when magnified by huge amounts of leverage, blew up the foundations of the financial system and the economy.