A Case Study about Self-Interest on Mutual Fund Management
Abstract: Previous research has concluded that mutual funds’ clients do have asymmetric performance reactions. Such behavior gives the fund manager the opportunity to optimize the fund’s own interests. Using a unique database from a financial system wherein commercial interests, investment banking and portfolio management are concentrated in the same banking group, we show that mutual funds tend to exhibit biased portfolios, i.e., financial assets of the group’s parent company outweigh other financial asset holdings.
This cannot be explained by performance, risk or securities’ characteristics, and is consistent with the hypothesis of the existence of self-interest on mutual fund management. read more in Self-Interest on Mutual Fund Management..
Background: Paddy Power is Ireland’s biggest and most successful bookmaker, operating both a retail and an online/telephone division. Formed back in 1988, Paddy Power rapidly became a shining light in the Irish and UK betting industry. Innovation has been the key to the success for the company, who from day one sought to be different from the chasing pack. The vision was simple: position betting as entertainment; make betting with Paddy Power a fun experience that meant a lot more than simply winning or losing money.
Challenges: The prevention of underage betting and identity fraud is a significant concern in the online gaming sector, and businesses are increasingly seeking ways to reduce this risk. Paddy Power required a company that could offer a bespoke international identification and verification product, backed by an excellent support service, including portfolio management. Paddy Power needed an intelligent system that could take the information received from players and process it, using Callcredit’s data, to give a confident verification decision on new player applications.
Introduction: Many investment managers decouple portfolio management—the process for portfolio selection that defines an investment strategy from the trading process that implements that strategy. Sometimes this is a result of institutional structure, but in some cases it reflects lack of awareness of how much is actually at stake in execution.
This separation can result in unnecessary costs and sub optimal strategy performance, which is especially true for high-turnover strategies: the higher the turnover, the more significant the effects of execution quality on investment performance. This case study applies various tools for analyzing a statistical arbitrage trading program—a relatively high-turnover middle-frequency trading strategy—and demonstrates what one can expect from examining the execution combined with the investment strategy… Read More..
Companies face a multitude of challenges when designing and executing corporate strategies. Many fail to distinguish a strategic review from the annual budgeting process, or lack adequate processes for strategic planning. We have a set of core capabilities and tools that can help clients strengthen their strategies at the enterprise level.
Portfolio strategy and resource allocation: Many companies manage their portfolios through the annual review of a single over-arching budget. But such an approach can turn portfolio management into simply a series of budgeting exercises, hiding the true range of strategic options that a company has and obscuring individual initiatives and their risks. Companies can make high-level corrections this way, but cannot create a truly balanced portfolio. Read more..
Opportunity: Conroy Ross was engaged by an organization operating within the Alberta power industry that was grappling with how to better execute on its portfolio of over 200 projects across the enterprise. Each year, no matter how much effort or intent was exhibited by the executive team and staff, the organization continually failed to execute on all of its commitments. Read more..
Defining Active and Passive Management:
Active investors believe there is a constantly changing set of investment opportunities that can be captured by skillful investment managers. They buy and sell securities through market timing and stock picking to capitalize on these perceived opportunities. Passive investors believe there is a relatively constant relationship between risk and reward that can best be harnessed by using a consistent strategy over time. They do not engage in market timing or stock picking.
Active Management In active investment management, successes and failures exactly offset each other. For every active investor who wins, there will be one who loses. And, since active management is costly, the average return of all active investors will be less than the average return of all passive investors. There is no debate about this point among knowledgeable investors in either camp. It is a mathematical fact. Click here to read more…
Coldspur Asset Management has invested in RBC investable hedge fund index, which is an actively management portfolio of approximately 250 individual funds across nine strategies. The portfolio management committee of the firm is interested in comparative analysis of their investment with a benchmark – Credit Suisse/Tremont AllHedge Investable Index. The objective of this analysis is to understand the key determinants, most notably strategy allocation and asset selection, of the relative performance of RBC investment against the benchmark. Click here to read more…
J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $2 trillion and operations in more than 50 countries. The firm is a leader in investment banking financial services for consumers and businesses, financial transaction processing, asset and wealth management, and private equity.
Challenge: This global investment bank needed one unified set of management information from their financial systems transformation projects to manage them as global programmes and portfolios. They needed to demonstrate progress and compliance for senior stakeholders in closer to real-time, rather than in historical reports. With a new solution, management sought to better coordinate and deliver a complex series of international reorganisation decisions and reap their cost savings and business opportunities. Click here to read more…
Company: Merchants Insurance Group has been providing a variety of property and casualty insurance products for commercial and personal needs for over 90 years. The company operates in the Northeastern, Mid-Atlantic and North Central United States and has a network of over 650 independent insurance agents.
Challenge: With a growing number of signiﬁ cant corporate initiatives underway involving technology and business resources that possessed differing levels of project management acumen, Merchants Insurance sought to invest in developing and applying consistent project and portfolio management practices across the organization. Click here to read more…
Business Challenge: As a rapidly growing financial services organization, UBS Italia on-boards numerous new clients each month. Given each applicant discloses highly sensitive financial information they must go through an intensive application approval process.
However, after analyzing its new client on-boarding and client contract archiving processes, UBS Italia discovered that both business processes simply could not support its thriving business.UBS Italia’s new client on-boarding approval process – which involved new account opening, due diligence, portfolio management and credit card package approval – was extremely paper intensive, requiring manual data entry with no automated control or visibility into document status.Click here to read more…