Casey Quirk’s Brave New ($12 trillion) World
Nov 20th, 2007 | Filed under: Institutional InvestingIn early October, we wrote about a report by consultancy Casey Quirk and Merrill Lynch that heralded a ”brave new world” in the investment management industry. We were particularly interested to see that LDI, Unified Managed Accounts (UMAs) and 130/30 were going to be part of this new world. At the time, the report had not yet been released to the public. Now the report is available online here.
The report raises the usual alarm bells about market-to-market regulations making pension funding status more volatile, and about the transfer of retirement risk from corporations and governments to individuals via the closure of defined benefit plans (what the authors call “The Big Put”, but many pensioners refer to as “The Big Screw”). These issues, plus a low-yield environment, will continue to put pressure on the funding status of the world’s pension plans – although thankfully, things appear to have stabilized according the chart below from the report:
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