Pension funds in Europe are rebalancing their portfolios to reflect huge falls in equity markets as the financial crisis forces them to re-evaluate the relevance of their strategic asset allocation in the new market environment.
Good companies to work for are also good companies to invest in, according to new research by Alex Edman of the Wharton School, University of Pennsylvania. In a recent paper, Edmans says there is a direct positive correlation over the long term between employee satisfaction and stock market returns for the companies they work for. In fact, it’s a positive alpha of 4 per cent for his study of 100 companies between 1984 and 2005.
As markets turn south, remaining solvent is the biggest challenge facing Bankpension, Denmark’s 1.6 billion (US$2.1 billion) pension fund. Chief investment officer Leif Hasager talks to Kristen Paech about the measures the fund has introduced to protect against downside risk.
After many years of extraordinary growth, China has clearly been adversely affected by the global economic recession. Its own economy is slowing rapidly, with declines in exports, property prices, and fixed investment. In response, the Chinese government. strongly motivated to maintain stability, is injecting large doses of fiscal stimulus and making other administrative efforts to revive economic activity.
Investors need to be aware that rare events with an extreme impact that, afterwards, we think we could have predicted – in short, black swans – happen in the markets. Those who are trying to measure risk in the financial markets need to carefully distinguish risk, with its probabilities, from uncertainty, which cannot be measured. We have become increasingly vulnerable to black swans because our financial
economy has come to play an ever-larger role in our productive economy.
One of Canada’s largest public pension plans has diverted its immediate attention away from investments, and in particular new risk management tools, to solve its funding deficit issues. Amanda White spoke to PSPP’s plan board manager about their concerns.