Perspectives

Why Interest Rates Will Rise

The recent reports by McKinsey and the IMF have confirmed the strategy adopted by Cordiant in the late nineties. The decline in interest rates over the past three decades is often attributed to the ‘savings glut’. In reality, however, the global savings rate as a percent of global GDP declined from 24 percent in 1980 […]

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The Ease of Doing Business

Economic activity requires an encouraging regulatory environment and effective rules that are transparent and accessible to all. The 2011 issue of Doing Business1 confirms that the trend towards the streamlining of regulations continues, particularly in the developing world. Between June 2009 and May 2010, governments in 117 countries implemented 216 business regulation reforms. These reforms […]

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Double, Double Toil and Trouble Fire Burn and Cauldron Bubble

The following summarizes the IMF’s view on capital flows into developing countries.[1] Developed country sovereigns have experienced 25 downgrades since early 2008, while emerging market sovereigns have seen 21 upgrades during 2010.  The following chart[2] illustrates the diverging trends between developed and developing markets. As a result, we have seen strong capital inflows to emerging […]

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Benchmarking an Investor’s Objective

Just because everybody is doing it does not make it right, or to quote Henrik Ibsen: “the majority never has right on its side”. Capitalization weighted indices do not reflect the reality of institutional portfolios unless they are indexed. Actively managed portfolios do not hold three times as large a position in ABC as compared […]

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Misconception of Liquidity

Call me outdated but, as an investment advisor, I have always been puzzled by some of my clients’ concerns about liquidity.  Most pension funds have a duration of two decades, while most foundations and endowments have an infinite term.  They have a positive cash flow and little operational needs for liquidity.  Why, then, would they […]

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