FTfm on AV | FT Alphaville

FTfm on AV

Some highlights from Monday’s FTfm.

Windfall ahead from outsourcing
Persistent low yields are driving insurers out of their traditional investment grade bond portfolios and forcing them to invest in areas in which they have less expertise, creating $1tn of assets in opportunities for asset managers

Overhaul by S&P will trim top funds
Some of the funds making the top grade in Standard & Poor’s global ratings will no longer do so following an overhaul of the agency’s rating system from Monday.  S&P is tweaking its two-decade old grading methodology to increase the weighting given to due diligence and operational risk, portfolio monitoring systems and controls and the volatility of drawdowns.

Data show most actives fail
Net of fees, Lipper found only 26.7 per cent of active equity managers outperformed in 2011, rising to 40 per cent over three years and 34.9 per cent over the past decade. In comparison, 23.7 per cent of active bond managers outperformed last year, rising to 45.4 per cent over three years but then tailing off badly to just 16.2 per cent over the past 10 years.

Award for contrarian strategists
An exposé of why equally weighted equity portfolios appear capable of consistently outperforming other passive strategies has won S&P Indices’ first annual award for excellence in research on index-related topics.

Fund houses face fee drop in post-RDR landscape
The fear is that an “advice gap” will emerge, with Mr Power estimating the upfront cost of creating a tailored financial plan at around £700, is more than many people may be willing to pay. Costs could also rise under the new regime.

End of bull run will be cause for celebration
But Jonathan Davis thinks last week’s events might prove to be only the beginning of the end of the bond bull run cycle, rather than the absolute turning point. But when the absolute turning point finally does come, it will signal good news

The simple question that will encourage saving
When faced with a future choice, we generally select a smarter option, such as savings, while an immediate choice triggers the pleasure of spending. The science is clear. Brain scans show that the emotional and logical areas of our brains wrestle over immediate decisions, but our logical bits rule when considering our future well-being. Based on this knowledge of human nature, a “future enrolment” tweak to pension plans will swell the ranks of savers. When workers opt out of a plan, they should be asked: “when you would like to start saving?”