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Evaluating Private Equity Performance: PME vs. Direct Alpha

In a recent paper titled “Benchmarking Private Equity: The Direct Alpha Method,” authors Oleg Gredil, Barry E. Griffiths, and Rüdiger Stucke propose a new technique called “direct alpha” to overcome key issues with some typically used private equity benchmarking methodologies. read more…

Book Review: Fortune Tellers: The Story of America’s First Economic Forecasters

Investment professionals inundated by today’s constant stream of economic data may not appreciate how lucky they are. Unlike an earlier generation of practitioners, they are able to consult an incredible multiplicity of authorities who are willing to predict the future course of the economy.read more…

The Intuitive Investor: A Simple Model of Intuition

Last month, I started a regular column on the power of intuition in investing that inspired many of you to write to me directly to discuss your experiences. While most of you viewed intuition positively,read more…

Poll: Will Second-Quarter Earnings Exceed or Fail to Meet Expectations?

Earlier this week, we asked readers whether second-quarter earnings will exceed or fail to meet expectations across the globe. CFA Institute Financial NewsBrief asked readers whether second-quarter earnings exceed or fail to meet expectations across the globe. read more…

Nobel Laureate Robert Engle on VaR, Systemic Risk, and Liquidity

I sat down with Nobel laureate Robert Engle in Tokyo last month to discuss an amazingly wide range of applications that he and industry practitioners have found for ARCH (autoregressive conditional heteroscedasticity) models and related research.read more…

Designing Portfolios: Seven Key Investment Principles to Help Keep Clients on Track

You’ve no doubt heard the famous aphorism that “the market can stay irrational longer than you can stay solvent.” The saying may be well worn but it nonetheless serves as a useful call to action — especially when US markets are soaring to new highs and investors’ emotions are apt to be driving portfolio management decisions. read more…

What Has the Financial Crisis Taught Us about Bank Performance Reporting?

The financial crisis provided a watershed moment for enhancing the transparency of banks. Financial institutions researcher Stephen Ryan of New York University has characterized the financial crisis as the single most ”teachable moment” in finance.read more…

Is Private Equity Out of Tune with Society?

Private equity has never worried too much about its image problem. The industry has always been seen as hardheaded and focused on making money. But society’s values have changed in the wake of the global financial crisis,read more…

SEC to Vote on Money Market Fund Reform: Will It Benefit Investors?

The SEC appears poised to release the long-awaited rules aimed at making the money-market mutual fund industry less susceptible to destabilizing investor runs. 

According to a recent Bloomberg article,read more…

Nomura’s Richard Koo on Balance Sheet Recessions and the QE Trap (Video)

The world’s leading central banks have added massive amounts of liquidity to the financial system, yet global economies are still stumbling their way through a weak recovery. Banks are holding reserves far in excess of their required levels — twenty times the required level of reserves in the United States,read more…

Book Review: Recursive Models of Dynamic Linear Economies

Nearly 90% of Recursive Models of Dynamic Linear Economies was written between 1988 and 1994, and the remaining 10% was completed in 2012, after the authors, Thomas J. Sargent and Lars Peter Hansen, finally abandoned their thought of pursuing many possible improvements before releasing their book.read more…

Is Mainstream Finance Theory Adrift?

US President Harry Truman once joked that he wanted to find a one-armed economist who wouldn’t be able to hedge every opinion by saying “On the other hand. . . .” In the years following the 2007–09 financial crisis,read more…

Skills That Separate You As An Investment Manager: Decisiveness

In a recent series of posts, I have sought to complement my advice on how to become a research analyst by dissecting the skills that can separate you from the crowd once you have landed a coveted research analyst position.read more…

Corp Gov Roundup: Petrobrás, Short-termism, “Say on Pay” Results

It’s time to span the corporate governance globe to review important developments from the month of June. 

International 

A little over a month ago, the Global Network of Director Institutes (GNDI) threw its hat into the ongoing and always topical discussion on Curbing Excess Short-Termism in the markets.read more…

Generating Alpha Through Intermarket Analysis

It’s no secret that consistently generating alpha is extremely difficult. Today’s asset allocators and portfolio managers are constantly seeking new strategies to gain any sort of advantage. What if achieving an edge were as easy as an all-in,read more…

Dodd-Frank at a Crossroad: What’s Next for Bank Regulation? (Video)

As we approach the four-year anniversary of the US Dodd-Frank Act, many new financial industry rules meant to reform Wall Street remain incomplete. Bloomberg Government, in partnership with CFA Institute,read more…

Impact Investing in India: Poised to Grow?

Impact investments are expected to increase globally this year, with South Asia and Southeast Asia among the top target regions, according to a recent survey by JPMorgan and Global Impact Investing Network (GIIN).read more…

Poll: What Will Foreign Central Banks Do as the Federal Reserve Unwinds QE?

Since the US Federal Reserve began reducing (tapering) its purchases of US Treasury securities in December of 2013, many investors have begun to wonder how the status quo might change. According to the last 20 years of IMF data on foreign-exchange reserves (Currency Composition of Official Foreign Exchange Reserves,read more…

What Investors Need to Know about Post-Employee Benefit Accounting

Accounting for post-employment benefits under defined-benefit plans is a complex financial reporting area that has traditionally posed several interpretation challenges for investors and other readers of financial statements.read more…

Promoting Ethics in Investment: CFA Institute Updates “Code & Standards”

Every four to five years CFA Institute undertakes a review of the Code of Ethics and Standards of Professional Conduct, the ethical benchmark for investment professionals around the globe. A primary objective of the regular reviews is to ensure the principles of the Code and Standards remain relevant and applicable to the ever-evolving investment industry. read more…

The Intuitive Investor: Why Intuition Is Important

Over the course of my investment career, I used several unconventional tools to improve the results of the fund I co-managed, but none was more powerful than intuition. In fact, there is a growing regard for intuition as many successful investors,read more…

Self-Regulation in the Financial Markets

In the aftermath of the global financial crisis, many finance industry commentators have scrutinized the role of regulators in contributing to the crisis. Particular scrutiny has fallen on self-regulatory organizations (SROs).read more…

Financial Advisers: Heed Gender Differences in Your Clients’ Communication Styles

Communication is key in relationships — not only in marriages and partnerships, but also between financial advisers and their clients. But, as we have all learned the hard way, it’s very easy to miscommunicate;read more…

How Can Fixed-Income Investors Address ESG Considerations?

There is increasing interest in environmental, social, and governance (ESG) issues, but how can investors apply ESG considerations to their decision-making process? Earlier this year, we conducted an interview with Jeroen Bos,read more…

The Robot Revolution: Innovation Begets Innovation

AGCO Corporation (AGCO), a farm machinery manufacturer in Hesston, Kansas, recently installed its 28th robot. Ford Motor Company (F) just installed 600 robots in just one facility, its Flat Rock Assembly Plant plant in Michigan.read more…

EU Policy Update: How the New EU Parliament Is Taking Shape (Podcast)

Josina Kamerling, head of regulatory outreach at CFA Institute for the Europe, Middle East, and Africa region, reports on EU policy issues. She covers the May European Parliament election results, including commentary on the next European Commission president,read more…

Yes, You Can Have a Serious Policy Discussion on Twitter (Just Ask the Bank of England)

Leading central banks have been engaged in a multiyear effort to demystify their operations by overhauling how they communicate with the public. On 30 May, the Bank of England added a new chapter to the unfolding story on central bank transparency by hosting a live Twitter chat with the general public.read more…

Elephant vs. Dragon: The Political and Economic Prospects of India and China

My firm recently sponsored an event on two emerging economies, China and India, titled “Elephant vs. Dragon: The Political and Economic Prospects of India and China.” At the event, Rawi Abdelal, aread more…

How to Invest If You Can’t Outperform the Market

Even if some people are able to outperform the market, most people are not. 

In financial jargon, most people do not have an edge over the market. This means that they can’t consistently outperform the market by picking different securities/sectors/geographies from the market as a whole,read more…

Should Banks Make Funding Value Adjustments? (Podcast)

Since the 2008 financial crisis, the derivatives industry has been embroiled in a controversy over whether to make funding value adjustments. A funding value adjustment (FVA) is an adjustment to the value of a derivative or a derivatives portfolio to ensure that a dealer recovers its average funding cost when it trades and hedges derivatives.read more…

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