Benchmarks stop us thinking: AXA IMBY BEN COLLINS | TUESDAY, 31 JUL 2012 11:45AMThe shock of the GFC, the impacts of the Euro crisis and moribund world capital markets ever since are forcing institutional investors to confront the reality that their traditional investments models aren't working, said AXA Investment Managers. |
Editor's Choice
Janus Henderson acquires NBK Wealth, Tabula Investment Management
Janus Henderson has acquired the wealth management arm of the National Bank of Kuwait, NBK Wealth, as well as European ETF provider, Tabula Investment Management.
ART names advice and education leads
Australian Retirement Trust (ART) has revamped its advice, guidance and education team and created two new leadership roles.
Men, women in same occupation drive pay gap
A whopping 80% of the gender pay gap can be attributed to women being paid less than men within the same occupation, a new economic analysis shows.
Macquarie Group profits falls 32% to $3.52bn
Macquarie Group has reported a net profit of $3.52 billion for the year ending 31 March 2024, a 32% decrease from the previous year.
Products
Featured Profile
Robert De Dominicis
CHIEF EXECUTIVE OFFICER
GBST HOLDINGS LIMITED
GBST HOLDINGS LIMITED
It was during a family sojourn to the seaside town of Pescara, Italy, Rob DeDominicis first laid eyes on what would become the harbinger of his future. Andrew McKean writes.
Often one of the products of smart-beta portfolios is the creation of blended benchmarks. There are some pretty substantial operational costs and risks associated with this new approach to benchmarking using blends and customised hedges. The choice of benchmark architecture should definitely not be an afterthought. Picture an example combining FSTE ASEAN EX-Singapore Hedged into SGD 50% blended with FSTE Singapore in SGD 50% assuming daily modelling? The issues dictated by who designs the rules of the blend, the calculation methodology, whether the creation of the new benchmark levels are calculated in-house or by a specialist provider, the availability of a license to calculate blended outcomes and general governance of business justification can all drive complexity, inefficiency and leave a difficult to foresee "event" risk. Now imagine scaling implementation and opps up to cope with systemic blending of benchmarks for trade management, compliance, risk and performance attribution in-house - one of the popular choices. However you measure the likelihood of an unfavourable event occurring regarding the blending, the impact of errors in a calculation may include paying out multi-year penalty fees and substantial reputational damage. RIMES recommends spending some time considering risk management and a review of externally available solutions to support blends and benchmark customisations.