This week Institutional Investor writers look into whether Wall Street will feel the impact of limited Net neutrality, why veteran-owned tech businesses can make good investments and how cash balance plans are breathing new life into the defined-benefit-retirement model. Here are our best stories of the week:
1. Could Curbs on Net Neutrality Affect the Financial Industry?
With President Barack Obama finally taking a stand on Net neutrality (he’s for it), the conversation surrounding the potential impact of Internet service providers’ deciding to create so-called fast and slow lanes or other limitations has gained a second wind. But what impact could it have on the markets? Senior Writer Aaron Timms explains why the answer may be “not much at all.”
2. Former Deutsche Bank Securities CEO Tommy Gahan Wants to Capitalize on Volatility
Senior Writer Julie Segal profiles Thomas (Tommy) Gahan and his New York–based investment firm Benefit Street Partners. Gahan, who resigned as CEO of Deutsche Bank Securities in March 2008, is hoping that bankers who started trading junk bonds in the 1980s will now come to him with smart formulas for picking credit investments. “We were at the table inventing many of the structures that are currently in the market,” Gahan tells Segal. “That understanding is fundamental for an investor trying to reengineer and disentangle these securities.”
3. Asia’s Top 20 Investment Managers
Mitsubishi UFJ Asset Management takes the top spot in Japan equities in II’s first-ever Asia Investment Management Awards, thanks to its ability to deliver a 138 percent gain over three years to the end of September. Also making the list for Japan is Sumitomo Mitsui Trust Asset Management, which takes the top spot for fixed income, while Fortune SGAM Fund Management Co. holds the position as best in China equities ???and Mizuho Asset Management Co. is tops in Asia-Pacific fixed income.
4. Tech-Savvy Veterans Are Luring Investors to Their Start-Ups
Although unemployment is high among veterans, many leave the service with a wealth of highly marketable technology skills. Stuart Sutley, a veteran of Operation Desert Storm, has helped create a venture capital fund focused solely on investing in veteran-owned businesses, which, according to him, represent a growing opportunity for investment.
5. New Cash Balance Plans Offer an Untapped Market for RIAs
Defined benefit plans may seem endangered to some, but a plan often used as a tax shelter for executives has proved to be beneficial to — and increasingly popular with — the average investor. Employers, especially at small businesses, are moving into cash balance plans, which draw from pretax income and provide a nice complement to existing 401(k)s.
6. Ruble Gets a Boost After Russia Adopts a Free-Floating Exchange Rate
Russia has a new tactic for managing panic and speculation about its currency: a free-floating exchange rate and no more routine intervention. The plan, announced on Monday, November 10, has been good for the ruble so far, but questions remain regarding the long term. Russian Central Bank head Elvira Nabiullina said on Monday that the ruble rate is deeply undervalued, and President Vladimir Putin told reporters on the same day that “speculative jumps” in the currency market should soon come to an end.
7. Are Sovereign Wealth Funds Taking Over European Soccer?
What is Abu Dhabi’s International Petroleum Investment Co. (IPIC) doing investing in Spanish soccer team Real Madrid? Sovereign wealth funds have typically stayed away from Europe’s soccer clubs, despite reports suggesting that they have had their hands in the sport for years. Does IPIC see a financial boon — perhaps related to an upcoming IPO — where others don’t?
8. Passive Investors Win the Management Debate
The long-running debate over whether active or passive investment management is best may be coming to an end. Julie Segal argues that passive investors clearly have the upper hand. Citing recent Morningstar data that show investors withdrew in droves this year from active equity funds and flocked to indexes, she writes that “traditional active equity managers are in trouble.”
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