Alternative Viewpoints: When it comes to transparency, institutional investors are being treated as “second class citizens”
Jul 23rd, 2009 | Filed under: CAIA Alternative Viewpoints Columns, Institutional Investing, Today's PostToday, guest contributor Steve Deutsch of Morningstar says that despite all the talk of “transparency”, the micro-economics of the institutional investment industry often prevent the message from getting through.
Special to AllAboutAlpha.com by: Steve Deutsch, CFA, CAIA, Director of Separate Accounts/Collective Investment Trusts and the Pensions, Endowments, and Foundations Database, Morningstar, Inc.
As we continue to experience an economic and financial correction, all sorts of remedies have been prescribed. Most recently, the Investors’ Working Group, composed of the Council of Institutional Investors and the CFA Institute, have made several recommendations. And no less an authority than the Pope himself has weighed in on the subject in his June 29th, 2009 Encyclical Letter, which the Financial Times summarized as a condemnation of capitalism’s failures and a call for stronger government regulation.
A standard elixir during financial calamities, in years past and right now, is always “transparency”. But what exactly does this mean for institutional investors?
“Shenanigans”
While the world may be “flat” when it comes to global trade (see Thomas Friedman’s “The World is Flat: A Brief History of the Twenty-first Century”), the world is still as round as ever for financial markets (as proposed by author David Smick in “The World is Curved: Hidden Dangers to the Global Economy.”)
Smick argues that: More…
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