If you wish to lower the volatility of your portfolio, stop looking at it so often.— Rick Ferri, CFA (@Rick_Ferri) October 27, 2018
‘We have been growing customers for General Motors’ observed Lewis Crusoe, a vice-president of the Ford Motor Company in the 1950s.
Mr Crusoe was talking about a well-known problem at the company; low-income Ford owners were trading up to a medium-priced car from its big rival General Motors, as soon as their earnings rose above a certain level.
To address this problem, Ford invested over $250 million to design a new model, the Ford Edsel, especially aimed at the mid-market.
It was launched amidst an obscene fanfare and Ford expected to sell 200,000 Edsels in the first year alone. Well,
Should advisers use free – but often inferior – tools offered by platforms and product providers, or should they pay for best-of-breed, independent tools available in the marketplace?
This debate has raged among advisers for a long time.
The FCA might have inadvertently settled this debate in its interim report on the platform market study (MS17/1.2). The regulator’s focus here is on whether platform tools have clear direct or indirect benefits for consumers, or whether they have any potential to incentivise advisers. In this case, the risk is that advisers would be less likely to act in the best interests
Today, we publish our Multi-Asset Fund Guide 2018 titled Dysfunctional Families. This guide is an in-depth analysis of 91 fund families consisting of 402 individual funds in which a £148bn of client’s money is invested.
The story of the cobra in India during British colonization is a surprisingly valuable one when it comes to multi-asset funds.
The venomous creature was a constant irritation to the Brits, given their lack of familiarity with the species. To rid this newly inhabited land of cobras, the colonial administrators devised a cunning plan: they offered a bounty for every dead cobra! The plan was
3-Year Cumulative Return
5-Year Cumulative Return
Is it just me or does anyone else remember a time that the fund was a top holding in many advisers and DFMs’ portfolios? If you weren’t holding GARS in your client’s portfolio, you weren’t cool. However, times have changed. It is far less popular these days. But with £20 billion in AUM, GARS remains a flagship fund for SLI/SLA (or is it
The annual Credit Suisse Global Investment Returns Yearbook (2018) should be on your reading list.
Compiled by Professors Elroy Dimson (Cambridge), Paul Marsh and Mike Staunton (London Business School), this epic publication provides incredible insight into asset class return going back 1900! So, we have 118 years data on major asset classes (Equity, Bonds, Bills), inflation and currency for 23 countries and three regions (World, World ex-US and Europe).
The data provides a colourful perspective on the behaviour of asset classes under a very wide range of market conditions, from the best of times to the worst. This insight doesn’t … More →
The big news on Friday is that Standard Life Aberdeen (SLA) has agreed to flog its life and pension business to the grandmaster of dead closed book consolidation, aka Phoenix Group. Phoenix is where customer service goes to die. It’s where life policies become lifeless, and pension plans are ‘zombified’. You might remember such names as Pearl, Abbey Life, Sun Life and Axa Wealth! But you only really know Phoenix exits when you’re banging your head against your desk trying to get a valuation from them.
With this deal, SLA is effectively getting out of life and pensions business for … More →
Managing retirement income portfolios is riddled with old wives’ fables; practices handed down from adviser to adviser but with very little empirical basis. (Really, these practices are often promulgated by men, so the term ‘old men’s fables’ is probably more appropriate but that doesn’t roll off the tongue. But I digress)
One of such practices is the idea that holding large cash reserve in a retirement portfolio helps mitigate sequence risk and improves the sustainability of a retirement portfolio. The reasoning is that, by holding 2 to 5 years worth of income in cash, you avoid selling down equities during … More →
One area we looked at in the latest multi-asset fund research is whether multi-asset managers can justify their existence (and high fees), by pointing to the alpha they generate. This is the return they can bring in, over and above the market portfolio.
To illustrate this point, we looked at the alpha for the last five years of multi-asset funds. For this assessment, we divided multi-asset funds into five risk categories, based broadly on their asset allocation and volatility of each fund. Each risk category includes funds aimed at clients with similar risk profiles.
Then we examined the alpha delivered … More →
In the late 1600s, William III introduced the so-called Window Tax, a levy on people living in homes with more than six windows, a crude measure of prosperity at the time.
To avoid this tax, some homeowners responded by bricking up all windows except the six! As the bricked-up windows prevented some rooms from receiving any sunlight, the tax was referred to as ‘daylight robbery‘, because it was considered to be a tax on light and air!
Today, we published the 2017 edition of The Multi-Asset Fund Guide titled The Gravy Train. A key conclusion of the … More →