06-03-12 © VizArch

    Today's Post

    Money Markets: The Cure to What Ails the Sukuk Space Two World Bank economists review the impediments that face the growth of the sukuk market, impediments often inherent in the theological precepts that gave rise to it. Part of the solution: well-functioning money markets as a context for sukuk issuance.

    A new working paper from World Bank economists looks at the sukuk space from the point of view of development: that is, where compliance with Islamic principles is important for much of the population, impediments to a sukuk market becomes impediments to economic development. The authors [Ketut Ariadi Kusuma, senior securities market specialist, and Anderson Caputo Silva, lead securities market specialist] maintain that certain problems associated with the issuance of sukuk, an instrument in Islamic finance, do impede broader development, and they propose that policy makers in affected countries “use a framework similar to that of the development of conventional bond markets” in order to remove this impediment. One idea in particular that stands out, because it is stressed here more than it usually is in such discussions, is the role of money markets as enablers of sukuk. What the Sukuk Space Looks Like Kusuma and Silva say that $147 billion in sukuk bonds issued in 2012. The level of issuance in 2013 was somewhat below that, at $124 billion, a dip in the ...

Featured Post


The Skorina Report: Another try at herding Gotham’s five-headed fund

Guest columnist Charles Skorina looks at the five-headed NYC pension system with its new leader, Scott Evans.

By Charles Skorina In July, Scott Evans reported for duty as Chief Investment Officer in New York City's Bureau of Asset Management, where he'll manage $160 billion in employee pension funds. Traditionally the city's CIO is replaced when the political wheel turns, which it did last fall. Retiring Mayor Michael Bloomberg was succeeded by William De Blasio; and Comptroller John Liu, the independently-elected custodian of the city's pension funds, was replaced by Scott Stringer. Mr. Stringer beat back a last-minute primary challenge from disgraced ...


One Ordinary Week in the Life of Climate Change


We thought it would be instructive to share with you links and the odd quote from recent press reports on the subject of climate change.  As a professional investor,  you no doubt want to be ahead of trends in the investment world.   Investment opportunities arise when there is a divergence of opinion, as is uniquely the case in the United States (unlike the other nations on Earth) on the subject of climate change.  The headlines of a few days tell ...

Guest Posts


The Skorina Report: Another try at herding Gotham’s five-headed fund
Guest columnist Charles Skorina looks at the five-headed NYC pension system with its new leader, Scott Evans.

By Charles Skorina In July, Scott Evans reported for duty as Chief Investment Officer in New York City's Bureau of Asset Management, where he'll manage $160 billion in employee pension funds. Traditionally the city's CIO is replaced when the political wheel turns, which it did last fall. Retiring Mayor Michael Bloomberg was succeeded by William De Blasio; and Comptroller John Liu, the independently-elected custodian of the city's pension funds, was replaced by Scott Stringer. Mr. Stringer beat back a last-minute primary challenge from disgraced ...


Socially responsible investing

Longevity Risk: Wary of Your 2015, and of Somebody Else’s Life Span?
The new survey from Natixis tells us that a lot of asset-managing institutions think their industry as a whole has been quite slow about moving in the direction of liability-driven investment strategies. Also, more than half believe traditional assets are too correlated to provide them with the diversification they need.

Here’s a holiday season toast to our readers: may you live long enough to make life more difficult for an asset manager somewhere, the one who has to think of your longevity as a risk. Okay, that is a bit wordy and awkward as toasts go, but it captures a point. When a lifetime of benefits is defined by contract, to any degree (whether a pure DC plan or a hybrid), somebody’s early death is somebody else’s investment gain. And vice versa. Bearing on that point: Natixis Global Asset Management has just ...

Frontier markets

Missing the Market: An American Visits Nigeria
Guest columnist Doug Friedenberg explores Nigeria as a frontier market.

When we told friends and associates of our invitation to visit Nigeria,  they all said the same thing (excepting our esteemed editor, who worried about something else which was, at least, to be found in the subject country):  “Try not to catch ebola.”  Which, as you will see, summed up beautifully a misconception in the United States which requires only a few facts to set right.  Ebola’s epicenter is at least a thousand miles away from Nigeria.  Location-wise, worrying about catching ebola in Nigeria is more like worrying whether someone in ...

Technology

Plans for a Nickel-Tick Pilot: Trouble in the Details
Observers of the slow slog toward an empirical test of larger tick sizes have raised concerns about the details of the three-track plan under consideration. In particular, there's an order-protection feature for one of the three "tracks" that has raised the hackles of Larry Tabb and the STA

One of the provisions of the JOBS Act of 2012 strongly suggested that the Securities and Exchange Commission experiment with the tick sizes of securities. There is an impressive case to be made that wider tick sizes support an infrastructure that has various positive effects that have been squelched by the 1990s move to doing everything in pennies or smaller increments still. Accordingly, in February 2014 the House of Representatives passed a bill more specifically targeted on this point than the broad gauge JOBS Act had been. The House passed the ...

Asset allocation

Election direction, market correction, asset selection…it’s all an investment question
In the U.S., the midterm elections will largely dictate the course of the remaining years of the current presidential term. This course also plays a major role in the future direction and relative strength of the US markets, which subsequently impact advisors’ decision-making for client portfolios. The interplay between these three areas justifies a closer look at how their relationship correlates to the process of investment management.

By Diane Harrison In the world of investment management, 2015 will arrive with little fanfare but perhaps more trepidation than usual. Advisors will consider a myriad of factors, both economic and not, which weigh on their overall investment decisions. The variables are many, and the impact on individual portfolios more so. How to navigate through the financial jungle facing their clients? In the U.S., the midterm elections will largely dictate the course of the remaining years of the current presidential term. This course also plays a major role in the future direction ...

Retail Investing

Case study: Straits gives managed futures a facelift
As alternative investments become more mainstream, managers who traditionally have operated in the alternatives arena face a number of questions, including what is the right offering, the proper structure and how do we market the new vehicle. Guest columnist Ginger Szala examines the thought processes of one group as they made the leap to retailization.

By Ginger Szala When the JOBS Act is discussed in managed fund circles, it’s typically due to its elimination of the ban on general solicitation and advertising by capital raisers, such as hedge funds. Obviously that’s a big plus, but another part of the Act that gave a lift to private placement funds was the increase to 2000 in allowable accredited investment holders. Previously, going over 500 investors triggered onerous reporting requirements under the Securities Exchange ...

Legislation/Court rulings

The Magnetism of Insider Trading: Part One
A three-judge panel of the appeals court instructed the district court to "dismiss the indictment with prejudice as it pertains to Newman and Chiasson." Here we discuss why. in the second part, we'll discuss the likely consequences.

Todd Newman and Anthony Chiasson have won an appeal from their convictions of insider trading. The big outstanding question for alpha seekers is whether this decision will have a tempering effect on ongoing prosecutorial efforts, and (if so) whether that will make life easier, the paths less booby-trapped, for aggressive equity-oriented traders. I hope to tackle that big question here in the near future. But as a preliminary, let’s talk today about the specifics of the ...

Real Estate

Does Leverage Have a Positive or Negative Effect on Private Equity Real Estate Investments?
Guest columnist Brad Case, Ph.D., CFA, CAIA, explores the effects of leverage on private equity real estate investments.

By Brad Case, Ph.D., CFA, CAIA On balance it’s probably positive, provided you’re in the market during enough good periods to offset the pernicious effects of leverage during bad periods. Unfortunately fund managers have managed leverage very badly. Here’s how to estimate the effect of leverage on the basis of typically available data: Since 2000Q1 the National Council of Real Estate Investment Fiduciaries (NCREIF, as part of its ODCE data base) has published quarterly data on three of ...

Technology

Qatar and the QIA: When the SWF Is Also a Family Office
The royal family in Qatar, the House of Thani, just took direct control of the emirate's sovereign wealth fund. Also, that fund just invested big in Uber, confirming its reputation as perhaps the worlds most aggressive deal-hunting institution.

In recent days, two important pieces of information about the Qatar Investment Authority, the emirate’s sovereign wealth fund, emerged into public consciousness. First, the emir has replaced the chief executive of the SWF, Ahmad Al-Sayed, with a royal family member, Sheikh Abdullah Bin Mohammed Bin Saud Al-Thani. The state-run news agency announced as much on December 3d. Second, the QIA has gotten behind the makers of the ride-sharing app, Uber. An Executive Sheikh-Up Taking the first, first: The emir, ...