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InvestmentNews presents the latest research and findings from the financial industry. Now you can share your…
InvestmentNews presents the latest research and findings from the financial industry.
Now you can share your research with the investment community and stand out as a thought-leader.
For more information on posting your research on our website, contact Joan Mancuso, Special Reports Editor, 212-210-0496 or email [email protected].
General Accountability Office
In this report to Congress, the GAO reviewed the consolidated supervision programs at the Federal Reserve, Office of Thrift Supervision and Securities and Exchange Commission. The GAO described policies and approaches that U.S. consolidated supervisors use to oversee large and small holding companies, reviewed the management of the consolidated supervision programs and evaluated how well consolidated supervisors are collaborating with each other in their activities.
Climate Risk Disclosure by the S&P 500
David Gardiner & Associates
How does climate change effect how your clients invest? According to this report, over half of the nation’s largest companies are providing inadequate disclosure to investors, despite growing financial losses in multiple sectors from climate change. S&P 500 corporations from 11 key industries don’t do enough to disclose risks and opportunities they face from climate change, the report said. (Republished with permission from Ceres.)
Could Tremors in the Subprime Mortgage Market Be the First Signs of an Earthquake?
Wharton School, University of Pennsylvania
For months, the steady drip of news about troubles in the pubprime mortgage market looked no worse than one would expect: merely a comeuppance for lenders, borrowers and investors who should have known that high-interest loans to people with poor credit were risky. During the same period, many economists started breathing again after concluding that the superheated home market of recent years had not become the burst bubble many had feared. But now some experts wonder whether those sighs of relief came too soon, especially in light of the troubles recently experienced by one of the largest subprime players, HSBC Holdings. (Republished with permission from Knowledge@Wharton the online research and business analysis journal of the Wharton School of the University of Pennsylvania.)
Increased Reliance on 401(k) Plans Calls for Better Information on Fees
General Accountability Office
While information on historical performance and investment risk for each 401(k) plan option is important for participants to understand, so too is information on fees because fees can significantly decrease participants’ retirement savings over the course of a career. This report highlights GAO testimony before the Committee on Education and Labor on the prevalence of 401(k) plans today and its recent work on providing better information to 401(k) participants and the Department of Labor on fees. The report discusses trends in the use of 40(k) plans and the types of fees associated with these plans.
Jeremy Siegel: Stocks Will Continue Their Upward Trend
Wharton School, University of Pennsylvania
Some media reports called it a Valentine’s Day gift to Wall Street. When Federal Reserve chairman Ben Bernanke appeared before Congress on Feb. 14 and 15, he gave an upbeat view of inflation and the economy, setting off a strong rally in stocks. The Dow Jones industrial average rose 87 points to 12,741.86. Bernanke told Congress that the economy seems to be moving to a slower but more sustainable rate of growth, which suggests that the Fed will hold short-term interest rates steady at 5.25%, where they have been since last summer. Will stocks continue to perform strongly? Knowledge@Wharton talked to Wharton School finance professor Jeremy Siegel, who predicted in his last podcast that the Fed was unlikely to raise interest rates anytime soon. (Republished with permission from Knowledge@Wharton the online research and business analysis journal of the Wharton School of the University of Pennsylvania.)
Sustaining Corporate Growth Requires ‘Big I’ and ‘small i’ Innovation
Wharton School, University of Pennsylvania
All companies, from major multinationals to startups, face a common challenge: how to grow their businesses so they can boost earnings and enhance the value of their shares. Far too often, however, firms find it difficult to sustain growth because they become risk averse and, as a result, opt for incremental product and service improvements instead of major initiatives, according to a study by a Wharton School marketing professor. (Republished with permission from Knowledge@Wharton the online research and business analysis journal of the Wharton School of the University of Pennsylvania.)
Why Hedge Funds Are Looking to India for Greater Upside Potential
Wharton School, University of Pennsylvania
A few years ago, hedge funds were barely on the radar screen in the Indian marketplace, and they were highly secretive investment vehicles even in the United States. Today, it’s a different story. As big returns are no longer easy to come by in domestic markets, international hedge funds are increasingly looking to countries like India and evaluating opportunities and the potential gains to be made. With near-daily headlines in the media about deals in India, limited partners are pushing hedge fund managers to see what kind of upside might be possible in this market. Knowledge@Wharton interviewed several experts, asking why India? What works and what doesn’t? (Republished with permission from Knowledge@Wharton the online research and business analysis journal of the Wharton School of the University of Pennsylvania.)
What’s Next for India: Beyond the Back Office
Boston Consulting Group and Wharton School, University of Pennsylvania
In December 2006, Mumbai-based Tech Mahindra won India’s biggest outsourcing deal to date — a five-year, $1 billion contract from British Telecom to provide technical support. While the deal further underscores India’s rapid ascent in global business, it also signals a transition for the world’s “back office” from its current status as a provider of data processors and call-center workers to its new role in outsourcing high-end, knowledge-based skills. The report looks at India’s move up the service value chain through knowledge process outsourcing, as well as its increasingly successful forays into global manufacturing. In addition, the report examines India’s attempts to overcome the problems with power and infrastructure that have stood in the way of a sustainable GDP growth rate, as well as the key part that foreign investment and competition will play in the upgrade. (Republished with permission from Knowledge@Wharton the online research and business analysis journal of the Wharton School of the University of Pennsylvania.)
Key Challenges Remain for Developing and Deploying Advanced Energy Technologies to Meet Future Needs
General Accountability Office, Department of Energy
The Department of Energy’s total budget authority for energy research and development dropped by over 85% (in real terms) from 1978 to 2005, peaking in the late 1970s but falling sharply when oil prices returned to lower levels in the mid-1980s. DOE’s R&D efforts have resulted in steady incremental progress in reducing costs for renewable energy technologies, reducing harmful emissions of coal-fired power plants and improving safety and efficiency of nuclear power plants. Further development and deployment of advanced renewable, fossil and nuclear energy technologies face several key challenges: developing cost-effective technologies, wind technologies and improved solar technologies, and other challenges as well as barriers. The GAO suggests that Congress consider further stimulating development and deployment of diversified energy by focusing R&D funding on advanced energy technologies.
Wharton School, University of Pennsylvania
A report released on February 2 from the Intergovernmental Panel on Climate Change cited “unequivocal” proof of global warming caused by man-made emissions of greenhouse gases. Meanwhile, some of the biggest corporations in the world, including Wal-Mart, Ford, General Electric and BP, have adopted highly visible “green” strategies, embracing environmentalism in their marketing and core business operations. But what does “going green” mean for the bottom line? (Republished with permission from Knowledge@Wharton the online research and business analysis journal of the Wharton School of the University of Pennsylvania.)
Housing Wealth and Consumer Spending
Congressional Budget Office
Consumer spending is an important part of Congressional Budget Office forecasts. It is affected by household wealth, including housing wealth. This background paper examines the potential effect of changes in housing wealth on consumer spending. It analyzes past trends in housing prices and consumer spending, permanent and transitory effects of housing prices on consumer spending and the implications for the future path of spending.
Alternative Minimum Tax (AMT): A Guide for Advisors and Their Clients
Pioneer Investments
Pioneer Investments presents this paper to help financial advisors and their clients recognize when the AMT may strike and present options for managing AMT exposure. One important option to reduce the potential hit from the AMT is investments in municipal bonds and municipal bond funds that are exempt from the AMT. Many investors may not be aware that they can use these investments to help retain more of their investment income if they are otherwise subject to the AMT.
Back to the Future: The Continuing Evolution of the Financial Advisory Business
Sharon J. Weinberg, Mark P. Hurley, Michele L. Caro, Thryth Hillary, Tobert L. Worthington, Joel I. Ryzowy, Laurent Van Hassel
In the summer of 2005, JPMorgan Asset Management published a report on the
future of the financial advisory business entitled “Back to the Future: The
Continuing Evolution of the Financial Advisory Business. The paper was
published as a follow-up to the much-discussed 1999 Undiscovered Managers
Report entitled “The Future of the Financial Advisory Business”. The
updated paper describes the current structure and economics of the
independent financial advisory industry, how we believe the industry will
evolve in the next 5-7 years and the various strategic options available to
financial advisory firms.
In February 2006, TIAA-CREF contracted with Greenberg, Quinlan, Rosner Research to survey 1002 current participants, including 501 who invest in the CREF Social Choice Account (SCA) and 501 who do not invest in the SCA. Initally developed with the input of the participants in the 1980’s, the CREF Social Choice Account has grown into the world’s largest social screened investment fund for individual investors with just over $8.06 billion in assets (as of 3/31/2006)
The survey sought to examine participants’ attitudes around Socially Responsible Investing (SRI), to gauge their knowledge of and commitment to TIAA-CREF’s SRI strategies, and to inform the company’s SRI strategies moving forward.
A Critical Look at Managed Accounts and Hedge Funds: What Sells Doesn’t Necessarily Work
Ron Surz
Managed accounts and hedge funds are selling better than hot cakes, but are they as good for investors? Do these investment vehicles deliver on their promises? Do managed accounts provide better performance than passive alternatives? Do hedge funds provide better risk-adjusted performance? This text examines the promises of these hot items, and recommends caveat emptor, especially if certain basic improvements are not put into place. These trains are rolling down rickety tracks.
Jane Li, CFA, FundQuest
“Active” or “Passive”? The long-standing debate over which approach to investment
management is the best solution for investors has raged seemingly forever.
FundQuest recently performed an analysis on the benefits of active and passive
portfolio management. Specifically, the study was done to determine if one type of
investing has produced better historical performance than the other or whether they
both had areas of strength. The analysis focused specifically on two types of
investments: mutual funds and separately managed accounts.
Mutual Fund Share Class Limits and Share Class Suitability
Morningstar Associates, LLC
Recently, the Securities and Exchange Commission and National Association of Securities
Dealers have tackled the topic of share class suitability for investors in “load” funds—i.e., funds with embedded sales charges that are sold by financial intermediaries. The two regulatory bodies have shown concern that investors are being overcharged by brokers who have directed clients to B and C share classes rather than realizing breakpoint discounts with A shares. The NASD has conducted numerous “sweeps” of brokerage firms looking for these sales abuses, and has issued more than $50 million in fines and investor restitution since 2003.
As a result of these enforcement actions and concerns about regulatory risk, new “bright line” share class limits have informally emerged such that B and C share classes typically may not be sold to investors who have at least $50,000 or $250,000 respectively to invest.
This study examines the extent to which investors are protected by share class limits, and how financial advisors who seek to fulfill their fiduciary and suitability obligations to their clients can determine which share class is suitable given the client’s investment horizon and wealth.
The Allianz American Legacies Study
The Seven Myths of the American Legacy
In 2005, Allianz Life launched The Allianz American Legacies Study, a groundbreaking, comprehensive survey of the attitudes, hopes, worries, priorities, plans and goals of both the elder generation and their heirs—the 78 million-strong baby boom generation. Working with Age Wave and Ken Dychtwald, the nation’s foremost expert on aging, and Harris Interactive, a leading market research firm, we conducted a national survey which included interviews with 1,345 elders and 1,282 baby boomers. In addition, we conducted in-depth interviews with some of the most successful advisors in the inheritance planning business. In this exclusive report, we will tell you what we learned.
Worth the Wait: New Roth 401(k) Reshapes the Retirement Plan Landscape
Pioneer Investments
This paper examines key details of Roth 401(k) contibutions, compares them with
other retirement savings options, and analyzes the factors that will impact the
decision to make Roth 401(k) contributions — all with a particular emphasis on
the owner-only business.
Robert C. Pozen
Health Savings Accounts (HSAs), which were introduced in January 2004, now offer a potentially promising approach to rising health care costs.
The accounts allow consumers to use tax-free dollars to pay for routine health care expenses, such as doctors ’office visits and prescription drugs. They must be offered in combination with High Deductible Health Plans (HDHPs), which provide insurance coverage for major medical events.
This White Paper provides employers with an initial overview of the operation of HSAs, including details of their key tax features.
View Health Savings Accounts White Paper
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