6 October 2016

Raised Expectations, Lowered Rates of Return

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Is Technology Making You Too Bullish on Stocks?

The CFA Institute European Investment Conference is a focused, interactive conference for Europe’s leading investment professionals. The 2017 CFA Institute European Investment Conference will bring portfolio managers, analysts, chief investment officers, and CEOs together in Berlin on 16–17 November.

In the aftermath of the Global Financial Crisis, central banks have pursued near-zero interest rate policies, followed by zero interest rate policies, arriving at negative interest rate policies in some countries. As rates continue their descent, their distortionary effect on expected returns has grown more pronounced, presenting investment managers with a difficult set of decisions.

A column in the Wall Street Journal noted that central banks’ interest rate policies have made everything more expensive than it looks. The column quotes Antti Ilmanen, a principal at AQR Capital Management, who says that “everything is expensive because this thing at the heart of the system has gone to all-time lows.” Lower interest rates make it difficult to determine the intrinsic value of an investment, which increases the risk that investment managers will pay too much for their investment returns. Read More

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23 September 2016

Gleanings from Brexit: Recommended Links

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More than half a century ago, the assassination of U.S. President John Fitzgerald Kennedy was so shocking that everyone remembered what they were doing when they heard the news. For many investors, the United Kingdom’s EU referendum results delivered a comparable surprise. And during the referendum, hardly a single inflammatory division was left unexplored by combatants. Three key post-modern fractures have now been laid bare: declining deference to experts, rising public rage, and a return of national self interest.

Deference to Experts Is Dead

The UK’s EU Referendum campaign was challenged by a failure of the public’s trust that professional experts can help us solve our most difficult problems. During the campaign, experts of every kind, a metropolitan media elite and a parade of City luminaries threw everything they had at persuading UK residents that their best interests lay inside the EU project, notwithstanding its unpopular structures and troubled currency. Instead, and despite a sympathy swing after the assassination of Jo Cox, a UK Member of Parliament and a popular Remain campaigner, the experts failed to win public trust by the day of the poll. Read More

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24 August 2016

What Can You Change For The Better?

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Ideas

The CFA Institute European Investment Conference is a focused, interactive conference for Europe’s leading investment professionals. The 2017 CFA Institute European Investment Conference will bring portfolio managers, analysts, chief investment officers, and CEOs together in Berlin on 16–17 November.

To think about how financial professionals can change the world, think first about how far we’ve come — I’m fond of reminding readers that it was once a fringe idea to examine accounting information and derive something of value for the investment decision-making process.

We didn’t arrive at modern best practices because a factor model fell out of a tree onto the head of a sleeping investor. The profession of investment management has developed over time through an iterative process where people tried different things, many of which were once considered too far from mainstream to be taken seriously. Read More

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20 July 2016

Registration Open: 2016 European Investment Conference

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Registration is now open for the 2016 European Investment Conference, held in Amsterdam on 7–8 November. This year’s conference is convened under the central theme, Adapting Approaches: New Models, New Mindsets, New Markets, to consider and analyze the European climate following the United Kingdom’s EU referendum. The event will include sessions with the following speakers:

  • Virginie Maisonneuve, CFA, founder and managing director of Maisonneuve Global Advisors and former managing director and chief investment officer of equities at PIMCO
  • Sony Kapoor, director of Re-Define, an international think tank, and CEO of Court Jesters Consulting

At last year’s European Investment Conference, Charles Robertson discussed Iran as the next frontier in investing, Tim Harford examined what it takes to get forecasts right, Lars Kroijer gave an overview of the ways that crowdfunding is democratizing investing, and Anne Richards outlined the asset management industry’s opportunity to adapt to disruptions.

This year’s conference, hosted at Hotel Okura Amsterdam by CFA Society Netherlands, will dig deeper into the most pressing topics for the profession, offering a truly unique opportunity to engage with Europe’s leading investment professionals.

Keep up with information and updates about this event by subscribing to the European Investment Conference blog.

All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

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2 December 2015

Building a Valued Service Culture in Investment Management

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Dan Ariely

Dan Ariely, the James B. Duke Professor of Psychology and Behavioral Economics at Duke University, set out to remind the 300 investment professionals at this year’s European Investment Conference of two simple facts:

  1. Human beings make irrational decisions in all areas of our lives, including finance.
  2. The concept of fairness, of earned reward — that someone has exerted effort, time, and energy in our service and therefore earned the payment we are providing them — can be just as important to us as the results they deliver. And sometimes more so.

Read More

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1 December 2015

Crowdfunding Needs Regulation to Scale Up

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Lars Kroijer

The young and rapidly evolving field of crowdfunding is democratizing investing like never before, making finance — donations, debt, equity — available where it wasn’t previously. It is cutting the cost of financing, offering higher risk-adjusted returns than traditional channels, and making a positive economic impact on people’s lives. While technological developments are helping crowdfunding grow, what is needed to scale up is enabling regulation.

Read More

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The Middle Office Strikes Back

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Lindsey Matthews, CFA

Not long ago, bright graduates seeking investment careers were guided solely toward research and front-office roles and steered away from functions dismissed as necessary but unglamorous middle-office positions — the descriptor “middle-office” evoking the staid and stable lifestyle of most hobbits in J.R.R. Tolkien’s “Middle-earth.”

But spectacular advances in computer-processing power, visualization methodologies, and other innovative techniques are now eroding boundaries among risk, performance, and investment decision-making professionals. Read More

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30 November 2015

Adapting to Disruptions in Asset Management

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Anne Richards

Anne Richards, chief investment officer and head of the EMEA region at Aberdeen Asset Management, believes that while the asset management industry is “facing disruption from every point on the compass,” there is an opportunity for the sector to mitigate these difficulties through the consistent need for well-structured investment advice.

Opening the second day of the European Investment Conference, Richards focused on several sources of dislocation in the industry and how professionals can adapt to these fast-evolving challenges

Read More

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The State of Europe: Current Challenges, Future Potential

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Lorenzo Bini Smaghi

Lorenzo Bini Smaghi, chair of the board of SNAM and former executive board member of the European Central Bank (ECB), starkly admitted that European authorities had underestimated the effects of the financial crisis on banks, resulting in a “lost half decade.”

In the closing keynote speech of the first day of the European Investment Conference, Bini Smaghi commented that, nevertheless, with a stronger institutional architecture in the form of the banking union, allied with low oil prices and a “weakening in the forces of austerity,” there is room for the eurozone to regain competitiveness. National governments must now undertake the necessary structural reforms to ensure that the loss of output does not become a lost decade, he said. Read More

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28 November 2015

Is Iran the Next Frontier in Investing?

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Charles Robertson
Could Iran be the new financial services frontier? Is it the “new Turkey” for investors? Or still part of the “Axis of Evil”?

These were some of the questions addressed by Charles Robertson, Renaissance Capital’s global chief economist and head of the company’s macro-strategy unit, as he spoke to an international crowd of investment management professionals at the European Investment Conference on 26 November 2015.

Iran is on its way to becoming investable in the very near future — and much sooner than many would expect, Robertson said. With its well-diversified economy and population of 80 million — roughly that of Turkey’s — Iran would seem to be full of potential for investors. Read More

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