NEWSLETTER of August 12, 2022

The following content has been added at finexpert:

Deloitte
EUROPEAN BANKING TREND RADAR EDITION 2: TRENDS IN ESG, REGULATORY & POLITICAL, AND ECONOMICS & FINANCIAL MARKETS PERSPECTIVES
The banking landscape is facing a massive shift. Trends relating to ESG, regulatory & political and economics & financial perspectives are merging to cause a seismic shakeup for the industry in the coming years. This report, the second in a series of three, focuses on emerging trends in the European banking sector, following our structured process to analyze trends. Whereas the first concentrated on client trends, this report highlights trends in the three dimensions “environmental, social and corporate governance (ESG)”, “regulatory and political”, and “economics and financial markets”. >more

Vanguard
FRAMEWORK FOR CONSTRUCTING GLOBALLY DIVERSIFIED PORTFOLIOS
When building a portfolio to meet a specific objective, it is critical to select a combination of assets that offers the best chance for meeting that objective, subject to the investor’s constraints. A sound investment strategy starts with an asset allocation that is built upon reasonable expectations for risk and returns and uses diversified investments to avoid exposure to unnecessary risks. This paper reviews the decisions individual investors face when constructing a globally diversified portfolio. We discuss the importance of broad asset allocation and diversification within sub-asset classes before homing in on specific funds. When building portfolios, broadly diversified, market-capitalization-weighted global index funds are a valuable starting point for many investors. They can be delivered inexpensively and provide exposure to the broad market while offering diversification and transparency. >more

Lazard
LAZARD’S H1 2022 REVIEW OF SHAREHOLDER ACTIVISM
Despite a challenging investing environment in 2022, activity remains elevated – Q2 was the second most active quarter in the past five quarters (behind only a record-setting Q1). Global campaign activity for Q2 (53 campaigns) is down 27% vs. Q1, in line with Q1/Q2 pattern of recent years. >more

Level 20
EUROPEAN GENDER DIVERSITY REPORT 2022
This report provides the first comprehensive data set on the representation of female investment professionals in Europe. The data spans the 13 European countries in which Level 20 has active chapters and supplements a UK analysis published in partnership with the BVCA, in March 2021. This data collection exercise marks the first step in establishing an authoritative analysis of gender diversity within the European PE and VC sector and includes data from over 1,000 PE and VC firms employing more than 9,000 investment professionals in 2022 – 14,000 when combined with UK data collected in 2021. >more

COMPETITION FOR ATTENTION IN THE ETF SPACE
Itzhak Ben-David, Francesco A. Franzoni, Byungwook Kim, and Rabih Moussawi
2021
The interplay between investors' demand and providers' incentives has shaped the evolution of exchange-traded funds (ETFs). While early ETFs offered diversification at low cost, later ETFs track niche portfolios and charge high fees. Strikingly, over their first five years, specialized ETFs lose about 30% in risk-adjusted terms. This underperformance cannot be explained by high fees or hedging demand. Rather, it is driven by the overvaluation of the underlying stocks. Overall, providers appear to cater to investors' extrapolative beliefs by issuing specialized ETFs that track attention-grabbing themes. >more

A NEW WOLF IN TOWN? PUMP-AND-DUMP MANIPULATION IN CRYPTOCURRENCY MARKETS
Anirudh Dhawan, and Tālis J. Putniņš
2021
We investigate the puzzle of widespread participation in cryptocurrency pump-and-dump manipulation schemes. Unlike stock market manipulators, cryptocurrency manipulators openly declare their intentions to pump specific coins, rather than trying to deceive investors. Puzzlingly, people join in despite negative expected returns. In a simple framework, we demonstrate how overconfidence and gambling preferences can explain participation in these schemes. Analyzing a sample of 355 cases in six months, we find strong empirical support for both mechanisms. Pumps generate extreme price distortions of 65% on average, abnormal trading volumes in the millions of dollars, and large wealth transfers between participants. >more