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About Bob Collie

Fiduciary Matters blog

Insights for institutional investors

August 25, 2014By

Forecasting interest rate movements is never easy—and it’s especially tough right now

Most readers of this blog are, I hope, familiar with the concept of the forward curve . The forward curve is the bond market’s version of the principle that what matters when you take an investment position is not so much what you expect to happen, but rather what you expect to happen relative to what is already priced in to the market.

Categories: Category: Fixed income, Liability driven investing
By August 20, 2014

The Supreme Court weighs in on stock drop cases (and on the efficiency of markets)

For fiduciaries of Employee Stock Ownership Plans (ESOPs) – or of 401(k) plans that offer a company stock option – stock drop lawsuits have been a source of worry for years.

By August 12, 2014

New evidence of the financial impact of ESG factors

Factor exposures (a.k.a smart beta ) have become a big deal in investment. It’s no longer just about large vs. small or value vs. growth. There are potentially hundreds of exposures that investment managers can now track, analyze and manage.

Categories: Category: Governance & risk management
By August 1, 2014

Pension smoothing has become a modern-day Indiana Pi Bill

Imagine the scene: a bill which establishes a new mathematical truth is introduced to a House of Representatives. Providing a convenient solution to a sticky problem, and with a favorable report, the House is happy to pass the bill. But as the bill moves to the Senate, further scrutiny throws doubts on the new “truth”, the

Categories: Category: Defined benefit strategy
By July 28, 2014

Human nature: Why we need protection from ourselves

You may have read Blink by Malcolm Gladwell or Thinking Fast and Slow by Daniel Kahneman. These authors and others have exposed human biases that stand in the way of making rational choices in our daily lives. There are implications for investment decision making, too. We should be looking to these insights – insights into the way we tend to think – in order to protect our investment programs from ourselves.

Categories: Category: Governance & risk management
By July 21, 2014

Access matters to performance

Why do we see such significant performance differences between the largest non-profit organizations (the multi-billion dollar institutions) and the smaller non-profits (say, under $500 million)? Is it expertise? Asset allocation? Risk tolerance? While all of these are causes of return differences, they are not exclusive to the larger pools of capital. What does tend to be exclusive to these larger pools is access. Most of the large, well-known non-profit organizations have incredible access to the best and brightest money managers. Why is that?

Categories: Category: Non-profit strategy
By July 14, 2014

All passive DC plans: Whose interest do they serve?

I recently saw some interesting statistics from a Defined Contribution (DC) plan sponsor survey. Sponsors were asked why they implemented passively managed funds in their plan. Nearly 75% of these sponsors said their primary reason was either “alleviate threat of lawsuits” or “fiduciary concerns.” The others said “they do not believe active managers outperform” or cited “cost of investments is the most important factor.”

Categories: Category: Defined contribution strategy