• RT @jpmorgan: Congratulations to J.P. Morgan Research analysts Phil Cusick, Lisa Gill and Jimmy Bhullar, who earned top spots on @iimag’s A…
    Institutional Investor Thu 17 Oct 2019 04:06
  • RT @rbccm: Our U.S. Research team achieved a Top 10 ranking in @iimag’s All-America Research Survey. We sat down with six of the ranked ana…
    Institutional Investor Thu 17 Oct 2019 04:06
  • RT @CIdzelis: Former SAC Analyst’s New Fund Attracts Canadian Pension Plans Link via @iimag https://t.co/Idtz7CvYDn
    Institutional Investor Thu 17 Oct 2019 04:06

    Goldcrest Farm Trust Advisors, co-founded by a former hedge fund analyst at SAC Capital Advisors, is attracting Canadian pension fund money to buy farmland in the U.S., according to a person with knowledge of the matter.  Ontario Teachers’ Pension Plan and PSP Investments have invested alongside Goldcrest in the new fund,

  • Premium: Former SAC Analyst’s New Fund Attracts Canadian Pension Plans Link https://t.co/Kq6JcwcCE9
    Institutional Investor Wed 16 Oct 2019 21:35
  • Michael Porter: Where ESG Fails Link https://t.co/UTpIiLuYFG
    Institutional Investor Wed 16 Oct 2019 18:45

    We are entering a new stage of understanding of the linkage between investment performance and social impact. Previous approaches, such as socially responsible investing and environmental, social, and governance screening, have obscured the opportunities for higher growth, profitability, and competitive advantage that come from treating social and environmental issues as integral to a company’s core strategic positioning. We term profit-driven social impact “shared value.” Emerging evidence, although still limited and company-specific, suggests that companies that successfully implement strategies to create shared value can deliver superior shareholder returns. Capturing that value, however, will require very different practices on the part of both corporate leaders and investors.

    Consider the companies, identified on Fortune magazine’s annual Change the World list, that are delivering profit-driven social impact. Many of them do not achieve the...

  • RT @AliciaMcElhaney: my latest for Institutional Investor... interviews with @VergerCEO, North Pier Consulting & Cambridge Associates https…
    Institutional Investor Wed 16 Oct 2019 17:45
  • BREAKING: Rockefeller Foundation CIO Donna Dean to Step Down Link https://t.co/wJniaZmHTk
    Institutional Investor Wed 16 Oct 2019 16:55

    The Rockefeller Foundation’s chief investment officer Donna Dean plans to retire toward the end of this year, the foundation announced Wednesday.  

    The organization’s deputy CIO, Chun Lai, will take on the top job after Dean departs, the announcement said.  

    Both Dean and Lai have served lengthy tenures at the Rockefeller Foundation. Dean joined in 1995 and Lai just a year later. Dean has led the foundation’s portfolio as CIO since 2001, when she was promoted from director of investments, according to the announcement.  

    During her tenure, Rockefeller’s assets under management grew from $2.4 billion in 1995 to $4.4 billion in 2017. In addition to work at Rockefeller, Dean serves on the investment committee for Queens University of Charlotte and is a trustee at Harbor Funds, an asset manager.

    Prior to joining Rockefeller, she worked under David Swensen at Yale University’s endowment. 

    “It...

  • The No. 1 Reason Institutions Fire Their Outsourced CIOs Link https://t.co/t9QfMneRHx
    Institutional Investor Wed 16 Oct 2019 14:00

    Institutions aren’t firing their outsourced chief investment officers (OCIOs) because they’re dissatisfied with performance.  

    Instead, the top motivation for switching from one OCIO to another is communication — or lack thereof — according to industry consultants.  

    The biggest culprits? OCIOs that mislead clients about investment strategy or underdeliver in communication frequency, according to Jim Scheinberg, founder of OCIO advisory and search firm North Pier Consulting.  

    “What we’ve heard more than anecdotally is that the consultant may talk a lot about topics and themes, but then doesn’t do any implementation,” Scheinberg said in an interview Tuesday. “They don’t follow through with actionable policy changes.” 

    A remedy for that, according to Margaret Chen, global head of endowments and foundations at Cambridge Associates, is being candid with clients.

    “I always tell people to be...

  • Private Equity Changes Everything Link https://t.co/NCf01P4W1m
    Institutional Investor Wed 16 Oct 2019 14:00

    Private equity is too big to ignore — for both investors and regulators.

    “It’s critical,” said Peter Witte, associate director of Ernst & Young’s private equity group, in a phone interview. “If you’re not invested in private equity, or private capital, then you’re really missing out on where our economy is growing.”

    Private equity firms now manage $3.4 trillion of investor commitments globally, up from less than $500 billion in 2000, according to a report, expected to be released Wednesday, from EY and the Kenan Institute of Private Enterprise at the University of North Carolina at Chapel Hill. Citing Preqin data, they said private capital assets have risen to $6 trillion, including infrastructure, real estate, private debt and natural resources.

    At the same time, the pool of publicly traded companies in the U.S. has shrunk by almost half in the past 20 years, according to the report, which cited data from The World Bank. Companies...

  • The ‘Missed Opportunity’ in Asset Management Link https://t.co/v7irvIPgNq
    Institutional Investor Tue 15 Oct 2019 20:29

    Active managers have been fighting for their lives in recent years as index funds have gobbled up their market share. But they may want to start working closely with their index rivals when it comes to shareholder proposals.

    That’s the conclusion of Rotterdam-based Robeco, which is calling for asset managers to coordinate on shareholder proposals when it comes to environmental, social, and governance issues facing public companies. The asset manager argues that only coordinated action will bring about meaningful changes in ESG. 

    In a white paper to be released later this week, Robeco acknowledges that the increased attention that the big passive managers — including BlackRock, Vanguard, and State Street — have paid to voting proxies has made a difference in corporate behavior toward climate and other issues.

    Still, recent research showed that index funds vote against shareholder proposals more than 90 percent of the time, according...

  • Bill Gross Is Back... Kind Of. Link https://t.co/9FKrv30sh9
    Institutional Investor Tue 15 Oct 2019 18:34

    What’s a former bond king to do in retirement? Bill Gross, co-founder of Pimco, is getting back to an occupation he was once well known for: writing investment outlooks.

    Gross, who stepped down as a portfolio manager at Janus Henderson Investors in February, first rose to fame while managing the Pimco Total Return fund. But he gained notoriety for his colorful investment outlooks. These monthly essays were ostensibly written about the bond market, but were as likely to include an original poem or reference to the “half erotic” release of a sneeze as they were to discuss interest rates. One post, published in April 2014, was a eulogy to his then-recently deceased cat, Bob.

    Now, eight months into his retirement from managing client capital, Gross has resurfaced with a new website containing an archive of his past writings, as well as a new piece published Tuesday.

    “These outlooks represent life as I saw it, and in many cases, lived...

  • Retail sales and CPI have not moved equity markets despite big swings in data. Link Sponsored by @cmegroup https://t.co/pU1HB8GBox
    Institutional Investor Tue 15 Oct 2019 15:14

    Three fundamental factors typically drive price movement in the equity indices: governmental policy, geopolitics and economic data.

    Given that changes in governmental policy and the occurrences of geopolitical events are not listed on any reliable calendar, the only thing we can really examine is economic data. It can be just as unpredictable as the other two, but we can be reasonably sure of two things: when the data will be made public and which releases might move equity markets if it varies from analyst expectations.

    Context Matters

    Different economic reports take on different levels of importance depending on the economic context of the time. The one exception is the Bureau of Labor Statistics’ (BLS) monthly Non-farm payrolls and unemployment report. If there was a Michael Jordan of economic reports (in other words, undisputed King. Sorry, LeBron) this would be it. Are there others that matter within the current economic environment? The answer to that...

  • Ivy League Endowments Fail to Beat a Simple U.S. 60-40 Portfolio — Again Link https://t.co/r6naj8edsn
    Institutional Investor Mon 14 Oct 2019 21:03

    A simple portfolio of 60 percent U.S. stocks and 40 percent U.S. bonds — know as a 60-40 — would have delivered almost 10 percent in fiscal 2019.

    But the average Ivy League endowment, which have portfolios filled with public and private investments sourced from around the world, only racked up a 6.7 percent return for the 12 months ending June 30. 

    The Ivies ended their two-year streak of beating a 60-40, according to research firm Markov Processes International. MPI calculated the 9.9 percent return on a domestic 60-40 portfolio using the S&P 500 index and Bloomberg Barclays U.S. aggregate bond index, rebalanced quarterly.

    According to an analysis by MPI, the average Ivy League endowment lagged a 60-40 portfolio five times in the last 16 years. 

    Brown University was the only Ivy to beat this benchmark, and did so by a huge margin. Brown returned 12.4 percent for fiscal year. Yale, run by David Swensen, had its third...

  • The ‘Boring’ Investors That Are Raking in Returns Link https://t.co/kU4ZzGXvwh
    Institutional Investor Mon 14 Oct 2019 20:33

    Corporate pension funds deserve their day in the sun. And this year, they’re basking in it. 

    The typical corporate plan has likely returned 20 percent or so in 2019 through the end of September — handily beating out the vast majority of endowments, foundations, public pensions, and the S&P 500 itself — according to Aviva Investors executive Tom Meyers. “We’ve seen very powerful asset returns,” Meyers, whose firm specializes corporate-pension investing, said in a phone interview. 

    Corporate funds tend be derisively viewed as “boring” in asset management circles, as they’ve shifted en masse to assets like long-duration bonds that move in line with their liabilities, a strategy called LDI. 

    But there’s nothing boring about their performance. 

    “It’s looking great so far,” General Mills’s chief investment officer Marie Pillai said in a phone interview. She oversees about $7 billion in pension and health care...

  • RT @LeannaO: Move over, Ivy League endowments: These boring investors are raking in returns... Link @iimag https://t.co…
    Institutional Investor Mon 14 Oct 2019 20:33

    Corporate pension funds deserve their day in the sun. And this year, they’re basking in it. 

    The typical corporate plan has likely returned 20 percent or so in 2019 through the end of September — handily beating out the vast majority of endowments, foundations, public pensions, and the S&P 500 itself — according to Aviva Investors executive Tom Meyers. “We’ve seen very powerful asset returns,” Meyers, whose firm specializes corporate-pension investing, said in a phone interview. 

    Corporate funds tend be derisively viewed as “boring” in asset management circles, as they’ve shifted en masse to assets like long-duration bonds that move in line with their liabilities, a strategy called LDI. 

    But there’s nothing boring about their performance. 

    “It’s looking great so far,” General Mills’s chief investment officer Marie Pillai said in a phone interview. She oversees about $7 billion in pension and health care...

  • Denise Shull Isn’t Done Seeking Damages From the Creators of ‘Billions’ Link https://t.co/zf7RQHBdrR
    Institutional Investor Mon 14 Oct 2019 20:13

    Denise Shull, the founder of consulting firm ReThink Group, is taking the creators of Showtime’s hedge fund series “Billions” back to court after her lawsuit against them was dismissed earlier this month.

    Shull announced Monday that she believes the U.S. District Court for the Southern District in New York “got it wrong” when it dismissed her copyright lawsuit against the network and the show’s creators. Her attorney, Rosanne Felicello of CKR Law, said by phone Monday that the appeal will be filed this week in the Second Circuit Court of Appeals. 

    In the dismissed lawsuit, Shull was seeking punitive damages after allegedly expecting to be compensated for assisting the creators of “Billions.” At issue in the case are Shull’s similarities to the show's character Wendy Rhoades, who plays an in-house performance coach for a hedge fund. Rhoades employs strategies similar to the ones Shull developed in her book, Market Mind Games: A Radical...

  • The Evolving Asset Owner Investment Model Link Sponsored by @NorthernTrust https://t.co/hWWNW0nHbE
    Institutional Investor Mon 14 Oct 2019 15:48

    In an environment of high fees for active management strategies and shifting regulatory requirements, many asset owners globally have chosen to manage their investments in-house in order to squeeze cost and process efficiencies out of the investment process, and to maintain greater control of it. Other asset owners are considering doing the same.

    This worldwide trend toward managing assets in-house has been accompanied by a desire to pursue increasingly sophisticated investment strategies. Such strategies, however, often depend upon leveraging the leading edge of technology and expertise that might not exist on an in-house team. In short, in-house investment management teams can spend a disproportionate amount of time trying to keep up on the operational side, often at the cost of time spent on areas of the process where they truly add value – investment management, preservation of capital, and driving returns.      

    “You...

  • The Hot New Alternative Investment: Lego? Link https://t.co/2OW6YbC3dr
    Institutional Investor Fri 11 Oct 2019 20:30

    Many parents are all too aware that Lego sets are pricey — building Hogwarts Castle costs $399.99, for example. But they could be an attractive alternative investment, new research shows.  

    A value-weighted index made up of investable Lego sets available between 1966 and 2018 showed a 1.2 percent inflation-adjusted annual return with low volatility and correlations to other asset classes, according to a paper published this month by researchers at the University of Northumbria.

    A body of research on the performance and diversification properties of collectibles like fine art, books, wine, whiskey, stamps, diamonds, and even violins has emerged. In fact, the Northumbria paper is the second study published on Legos as an asset class in as many years. In April 2018, Russian researchers at the National Research University Higher School of Economics in Moscow published a paper that showed even better gains for the toy blocks: 8...

  • AQR: Here’s What ESG Really Does to Portfolios Link https://t.co/7HZfAjTBq0
    Institutional Investor Fri 11 Oct 2019 19:20

    Are ESG strategies good for portfolios, or do they drag down returns? The answer, according to a trio of AQR researchers: It’s complicated.

    In new paper titled “Responsible Investing: The ESG-Efficient Frontier,” AQR principal Lasse Pedersen and managing directors Shaun Fitzgibbons and Lukasz Pomorski propose a model that balances the potential costs and benefits of ESG-based investing, taking into account investor preferences regarding environmental, social, and governance issues.

    In developing the model, they discovered that while some ESG measures predict higher returns, others lead to worse performance, and still others have a seemingly negligible impact on the portfolio.

    “We submit that if ESG is a positive predictor of future firm profits, then ESG is also a positive predictor of returns as long as the value of ESG is not fully priced in the market,” Pedersen, Fitzgibbons, and Pomorski wrote. “Further, the model predicts that this...

  • When EBITDA Is Just BS Link https://t.co/R9FRv1mgUI
    Institutional Investor Fri 11 Oct 2019 19:15

    One of the trends that you’d have been hard pressed to miss over the past decade has been rising valuations across virtually all markets. Developed and emerging, equity and credit, public and private —prices for everything have marched inexorably upward. 

    In private markets, the most commonly cited measure of average valuation is called the EBITDA multiple. Similar to the price-to-earnings ratio for public stocks, this number measures the capitalization, or price, of a business relative to its underlying earnings, in this case a specific metric called EBITDA, or earnings before interest, taxes, depreciation, and amortization. As we can see in the chart below, EBITDA multiples have continued to hit new highs, with the average buy-out deal transacting at approximately 11 times EBITDA through the first half of 2019. 

  • How a $75 Billion Bond Shop Plans to Stay Private Link https://t.co/CF85zlRWpU
    Institutional Investor Fri 11 Oct 2019 14:30

    Institutional investors love that privately held asset managers don’t have to play by all the same rules as their publicly traded peers, including establishing growth targets for new business. But Boston-based Income Research + Management, a $75 billion fixed income manager founded in 1987, is expanding its senior team and clarifying the roles of executives in part to satisfy investors’ and consultants’ desire for transparency. 

    Bill O’Malley, who joined the firm from Wellington Management as its third professional in 1994, is taking over as CEO and co-chief investment officer. Jack Sommers, co-founder of Income Research with his father John — and O’Malley’s roommate freshman year at Amherst College — will become executive chairperson of the firm’s executive committee. Sommers will continue to oversee compliance.

    O’Malley will share the co-CIO role with Jim Gubitosi, a senior portfolio manager. Sarah Kilpatrick, also a senior portfolio...

  • Investors Are Backing Off From Private Debt Link https://t.co/gDGxqHlgpR
    Institutional Investor Thu 10 Oct 2019 21:34

    The once-hot private debt sector is cooling down.

    In the third quarter of 2019, private debt funds secured just $22.1 billion — the lowest quarterly haul since the first three months of 2018, according to a new report from data provider Preqin. In that case, however, the $22.1 billion fundraise for that quarter followed 2017’s blockbuster fourth quarter, which recorded $54.4 billion in capital commitments. This time, the quarter’s fundraising stats are the continuation of an ongoing decline for the asset class.

    So far this year, private debt funds have raised about $75.5 billion, well below the nearly $91 billion committed to the asset class by this time last year. Preqin attributed the ongoing decline in fundraising to the widespread belief that markets are nearing the end of the current cycle.

    “Competition for lending opportunities remains a pressing concern for investors as the market continues to mature,” the report stated. “Fund...

  • GMO Is Feeling Pain Reminiscent of the Late 1990s Link https://t.co/xBRR2FWWPs
    Institutional Investor Thu 10 Oct 2019 21:04

    GMO’s pain is intensifying to levels the value investment firm last endured during the runup to the stock market bubble of 2000.

    “It seemed as if every single thing that could go wrong for us from an investment standpoint did,” Ben Inker, GMO’s head of asset allocation, said in the firm’s third-quarter letter to clients. “The recent cycle has gone on for significantly longer and the pain caused to our portfolios has begun to approach 1990s levels.”

    The losses GMO suffered during the extreme disparities in stock valuations before the internet bubble burst made it hard to convince clients that its prospective returns “were actually very good,” according to Inker. The firm, founded by Jeremy Grantham, is again seeking to persuade impatient clients that holding tight will similarly pay off.

    “As the current cycle has ground on slowly but surely, the valuation extremes have moved wider, creating an opportunity set for valuation-driven...

  • PIMCO Faces Gender Discrimination Lawsuit, Again Link https://t.co/w6HsmrDDL8
    Institutional Investor Thu 10 Oct 2019 18:34

    A lawyer at Pacific Investment Management Co. is suing the firm, alleging that it discriminated against her when it came to pay, promotions, and mentorship.  

    The lawsuit was filed by Andrea Martin Inokon, who serves as senior counsel at PIMCO, on September 23 in the Superior Court of California in Orange County. She is suing PIMCO, deputy general counsel Rick LeBrun, and global general counsel David Flattum.

    Inokon, an African American woman, alleges she was passed over for promotions at the firm because she was pregnant. Her lawsuit claims that women at the firm who have children are “tagged” as choosing their families over work, and thus, do not want to advance or to be paid equally. 

    A spokesperson for PIMCO denied the allegations when reached via email on Thursday. 

    “The allegations in this filing, in relation to PIMCO’s employee policies generally and the specific circumstances of this employee, are not...

  • RT @racheladhe: "A&M’s 9% allocation to PE and VC was roughly half the size of the average large endowment’s ... Energy and natural resourc…
    Institutional Investor Thu 10 Oct 2019 16:09
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