Investment Education
Forum
This newsletter addresses industry issues or advanced investment topics suitable for supplementing your investment knowledge.
Peer group comparison – it’s only natural
First Released: December 2008
Investors and super fund trustees are often told not to engage in ‘peer group’ comparison. However peer comparison can be hard to ignore, and sometimes may even be beneficial. In those cases it is important to ensure the comparisons are valid and, most importantly, know why you are doing the analysis in the first place.
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Our 10 step approach to evaluating manager risk
First Released: December 2008
Manager risk is a reality for investors regardless of the stage of the market cycle. This Forum outlines Russell’s ten step approach in evaluating the organisational and investment risks within a fund manager’s operations. The manager health check forms part of our well established ongoing monitoring framework.
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Winning the race: Streamlining multi-manager investing
First Released: September 2008
It is possible to streamline multi-managerportfolios through a recent innovation called Model-Driven Investing. Using the recently launched Russell Australian Shares Tracker Fund as a live example, this Forum outlines the cost savings and improved efficiency that can be achieved from successfully separating implementation from investment insight.
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Fundamental Indexation: Revolutionary or just another quant value strategy?
First Released: July 2008
Are market capitalisation (cap) weighted indexes an inferior species that should be replaced by fundamental indexes? In this edition of Forum, Rob Pereira argues that replacement of market cap weighted indexes as the benchmark of choice is inadvisable. The historical outperformance by fundamental indexes is intimately related to the performance of value stocks. For investors who want increased exposure to value strategies, there are more effective approaches than simply adjusting the index. In any case, it is Russell’s belief that a more balanced multi-style strategy that is carefully constructed around market cap indexes will provide more consistent alpha over time.
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Members or Investors
First Released: July 2008
Superannuation funds (and those that operate them) are subject to a bewildering tapestry of laws, regulations and general law principles. In an ideal world, these rules would all emanate from a single, cohesive and coherent set of assumptions. But is this an ideal world? In this Forum, Scott Donald, Director of Fiduciary Research, demonstrates that far from being
an ideal world, the laws relating to superannuation contain fundamental inconsistencies.
These inconsistencies are evident in the way different parts of the law characterise members
of superannuation funds as alternatively ‘beneficiaries’, ’employees’, ‘customers’, ‘investors’
or ‘citizens’. In the end, trustees and others with responsibility for superannuation funds must focus on the best interests of those they serve, recognising the unique role that superannuation plays in the provision of post-retirement income for the Australian population.
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Boutique Investment Managers
First Released: May 2008
Are boutique managers a good way to add some spice to your equity portfolio? What are the risks of being left with a bad taste? This Forum examines the growth and lifecycle of boutique equity managers in the Australian market. In the recent past, the typical boutique has generated attractive returns in the years following inception, even after adjusting for risk. However, excess returns tend to fade over time, and not all boutiques succeed. Maximising the benefi ts of investing in boutiques requires identifying the right managers; accessing them early; and monitoring their portfolio, performance and organisational structure for signs of a shift in focus. Effective manager research is an essential ingredient, particularly in the current diffi cult market environment where business models as well as investment processes could come under pressure. Now more than ever is the time for prudence and careful research when looking to ‘spice up’ your portfolio..
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Note: These articles are presented in PDF format. You must have Adobe Acrobat Reader installed on your computer to view PDF files.
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