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Modern Portfolio Theory still holds up: Harry Markowitz

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Despite the hype by some commentators that today’s market constitutes a ‘Black Swan’, the fall in equities markets experienced in the past year is well within normal expectations, according to Harry Markowitz. Asked by Investment & Technology recently to discuss the latest market disruption, the father of modern portfolio theory was quick to make a distinction between his work and the financial engineering for which he blames the crisis. “Portfolio theory is top down asset allocation with money allocated to professional funds managers; while financial engineering is structured products, which has led to a lot of highly leveraged products,” he said.

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ANZ Custody attempts turnaround from Opes problems

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One year on from the demise of Opes Prime and the subsequent culling of its equity finance business, ANZ Custodian Services has made efforts to strengthen its offerings by recruiting talent from competitors, rationalising its client base and carrying out due diligence on its systems. Following an internal review of its dealings with the disgraced stockbroker, an immediate move by ANZ was to cull its equity finance business, which provided the collateral used by Opes to issue margin loans to its clients but retained bank ownership of this collateral when the broker failed, leaving many investors with nothing.


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ANZ Custody attempts turnaround from Opes problems

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BNP Paribas continues Asian push in ‘new world order’ for custody

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Global custodians are likely to be asked to shoulder more of the potential liabilities from transaction services on behalf pension funds, rather than their smaller sub-custodians, because of the “new world order” for institutional banking. And this will be advantageous for those custodians which do provide both global and sub-custody under the one roof, according to Jacques-Philippe Marson, global chief executive of BNP Paribas Securities Services. Marson, a frequent visitor to Australia due to the custodian’s Asian expansion aspirations, says that in the new world order many financial institutions will be substantially owned by governments and this may impact on their reinvestment programs.


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BNP Paribas continues Asian push in ‘new world order’ for custody

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Capitalising on emerging markets volatility

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AXA Rosenberg Investment Management is launching an Australiandomiciled wholesale trust to accommodate what it believes will be a surge in demand for active emerging markets allocations. As the de-coupled theory that emerging markets would avoid the global downturn turned out to be unfounded in the past year, the number of companies trading at below their book value has risen to record levels, according to Bill Ricks, the chief investment officer for AXA Rosenberg in the Americas.


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Capitalising on emerging markets volatility

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Normal 0 false false false MicrosoftInternetExplorer4 st1:*{behavior:url(#ieooui) } /* Style Definitions */ table.MsoNormalTable {mso-style-name:”Table Normal”; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:””; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:”Times New Roman”; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} AXA Rosenberg Investment Management is launching an Australiandomiciled wholesale trust to accommodate what it believes will be a surge in demand for active emerging markets allocations. As the de-coupled theory that emerging markets would avoid the global downturn turned out to be unfounded in the past year, the number of companies trading at below their book value has risen to record levels, according to Bill Ricks, the chief investment officer for AXA Rosenberg in the Americas.

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MLC’s Condon shows how to not concentrate

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Reducing the home bias within portfolios and using index-agnostic managers are the most effective ways of dealing with excessive concentration to stocks in small markets, according to MLC. Speaking at the 2009 Biennial Convention of the Institute of Actuaries of Australia in Sydney late last month, Chris Condon, chief investment officer at MLC, listed eight ways for super funds to ameliorate “idiosyncratic risk” within their investment portfolios.


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MLC’s Condon shows how to not concentrate

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Normal 0 false false false MicrosoftInternetExplorer4 st1:*{behavior:url(#ieooui) } /* Style Definitions */ table.MsoNormalTable {mso-style-name:”Table Normal”; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:””; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:”Times New Roman”; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} Reducing the home bias within portfolios and using index-agnostic managers are the most effective ways of dealing with excessive concentration to stocks in small markets, according to MLC. Speaking at the 2009 Biennial Convention of the Institute of Actuaries of Australia in Sydney late last month, Chris Condon, chief investment officer at MLC, listed eight ways for super funds to ameliorate “idiosyncratic risk” within their investment portfolios.

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Help for super funds in these stress testing times

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BlackRock Solutions has completed the integration of global technology company Impact Investing, which it acquired mid-last year, and hopes its expanded suite of analytical software tools will appeal to newly risk-wary Australian super funds and fund managers. The enhanced business now includes analytical software tools across both equities and fixed income, and allows institutional investors to analyse the risks within their portfolios, drilling down to an individual stock level. Nigel Allfrey, managing director of BlackRock Solutions, said the new business was released internally to BlackRock’s asset management teams in January, and was now being progressively rolled out on a global basis.


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Help for super funds in these stress testing times

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Normal 0 false false false MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:”Table Normal”; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:””; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:”Times New Roman”; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} BlackRock Solutions has completed the integration of global technology company Impact Investing, which it acquired mid-last year, and hopes its expanded suite of analytical software tools will appeal to newly risk-wary Australian super funds and fund managers. The enhanced business now includes analytical software tools across both equities and fixed income, and allows institutional investors to analyse the risks within their portfolios, drilling down to an individual stock level. Nigel Allfrey, managing director of BlackRock Solutions, said the new business was released internally to BlackRock’s asset management teams in January, and was now being progressively rolled out on a global basis.

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Sorry Sun, the coal mining award is silent on super

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The $4.1 billion Auscoal Super has not been named as a default fund under the Australian Industrial Relations Commission’s award modernisation process, and a SunSuper attempt to have itself named as default has been thwarted, after it was deemed unnecessary to add a superannuation clause to the Black Coal Mining Industry Award. The Award was one of only a handful of awards recently revised by the AIRC that did not include superannuation. Colin McGuinness, strategic projects manager at Auscoal, said not being specifically named in the award was not a problem for the fund.


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Investment Magazine provides in-depth, monthly analysis of trends and developments for all the businesses in which superannuation funds engage‚ including asset allocation, investment manager selection, custody and fund accounting, member administration, group insurance and compliance.

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