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 →
Everywhere you turn these days, there’s talk of asset class ‘bubbles.’
Apparently, we’ve got a bond bubble. An equity market bubble. A property price bubble. A Bitcoin bubble. Oh, and a passive fund bubble! Hell, we’ve got a bubble of bubbles!
It’s not hard to understand why many think equity prices are elevated, and a ‘crash’ will inevitably follow. We’re now over eight years into the current bull market, and there are increasing concerns that equity valuations may be too high.
Get your CAPE on!
One of the more reliable valuation metrics is the Cyclical Adjusted Price Earnings (CAPE) … More →