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Thursday, 3 December 2020
Recently trending Five ways the Retirement Review points to new policiesGraeme Shaw on why investing is at a pivotal momentRetirement Review gives strong views on hoarding of super11 key findings on retirement dreams during the pandemicBank scorecard 2020: when will the mojo return?
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The story of Mr Market originated with Ben Graham and was further popularised by Warren Buffett, but does it still hold true? Based on experience, the two-investor scheme looks hopelessly oversimplified.
Investing is a field where experience matters, but we all operate with a set of beliefs. Staying on top of market research gives useful lessons for investors and challenges common assumptions.
Investing in a traditional index can be compared with taking the main road to a destination, but if you know the backroads and traffic conditions, you coud reach your goal quicker.
Where once the name plates of exciting new fund managers proudly displayed, now there are blank spaces. What is happening in the industry that so many talented people are closing the doors?
Many active managers are closet indexers. The real cost of forcing a skilled manager into a low tracking error is the limit to the upside.
The long bull market allowed passive investing to prosper, but over a whole cycle, companies with better fundamentals will outperform weak ones. The market is finally showing some dispersion.
Active managers trade more often and in larger amounts than passive managers do. Costs incurred from trading, in aggregate, can be substantial and ought to be considered in the decision to use active strategies.
The concept of factor investing has been around for decades and features in many portfolios. A considered and patient use of factors can enhance investment performance but not short term in all market conditions.
Inefficiencies in the small caps index means outperformance is common but that should not cost 60% more in fees than large caps. Large caps have outperformed small caps over the long term but with significant variability.
It’s worth deciphering how active 'active managers' are, whether their outperformance is sustainable, whether they cancel each other out and whether they are true to label. Know what you're paying for.
The active v passive debate has deflected attention from a more important issue, a focus on managing to client goals. Plus active management has suffered relative to passive by the central bank-driven uplift of all assets.
Most people focus on the threat of passive funds and ETFs to active investment management, but in this seminal paper exclusive to Cuffelinks, Jack Gray warns that Artificial Intelligence has barely scratched the surface.
The Retirement Income Review goes much further than an innocent-sounding 'fact base', and is sure to guide policies in the run up to the next election. It will change how we think about retirement incomes.
Company profits have not improved for many years but higher valuations have been driven by falling rates and excess liquidity. Conditions do not suit a value and contrarian manager but here are some opportunities.
The Review includes some profound findings, most notable that retirement income should include drawing down far more capital. Expect post-retirement products to proliferate under a Retirement Income Covenant.
A mid-pandemic survey of over 1,000 people near or in retirement found three in four are not confident how long their money will last. Only 18% felt their money was safe during a strong economic downturn.
Banks severely cut dividends in 2020 but are expected to improve payments in 2021. History provides clues to when the banks will return to their 2019 levels of profitability, but who is positioned the best?
It's not only that 60 is the new 40, but 80 is the new 60. Many Baby Boomers spend up in retirement and are less inclined to leave a nest egg to their children. The ways wealth transfers will affect all investors.