NEWSLETTER of June 13, 2025

The following content has been added at finexpert:

Research Affiliates
PASSIVE AGGRESSIVE: THE INCREASING RISKS OF PASSIVE DOMINANCE
Passive capitalization-weighted index funds now surpass active management in aggregate investor allocations. Flows into passive strategies cause unrelated stocks to move synchronously, undermining diversification and potentially increasing systemic risk. New flows into passive products mechanically overweight overvalued stocks and underweight undervalued stocks due to market-price weighting, exacerbating momentum-driven price distortions. Rebalancing at the stock level to non-price-based anchor weights may mitigate these distortions and enhance long-term returns. >more

Deutsche Bank Research
KREDITGESCHÄFT UND KONJUNKTUR IN Q1 2025: DER WENDEPUNKT?
The credit volume with companies and the self-employed is likely to have bottomed out. In Q1, it increased by a solid 0.5% (+0.9% compared to the previous year), with an improvement in industrial, self-employed and long-term loans. The cooperative banks are gaining market share. Credit standards and demand hardly changed. Lower interest rates are likely to provide support in the near future. Deposits are up 3.6%; financing alternatives remain without momentum. The German economy performed better than expected at the start of the year (GDP +0.4% compared to the previous quarter). This was due to pull-forward effects in foreign trade as well as increased investment and private consumer spending. Better depreciation opportunities and increasing government investment should soon provide a tailwind for companies and counteract the consequences of the customs dispute with the USA. The growth forecast remains at +0.3%/+1.5% (2025/26) for the time being. >more

BCG
HOW CFOS CAN LEAD BY EXAMPLE IN COST TRANSFORMATION
Successful CFO-led finance transformations build credibility, driving broader organizational buy-in and establishing finance as a model for efficiency and effectiveness. Balancing cost-efficiency with quality and compliance ensures that finance maintains its critical role of providing timely, accurate, and insightful guidance across the company. To succeed, CFOs should follow these steps: define the approach, benchmark current performance, set the ambition, identify specific cost levers, quantify targets, fund the journey, and focus on execution when implementing the program. >more

KfW Research
KFW-GRÜNDUNGSMONITOR 2025
Start-up activity in Germany increased slightly again in 2024, but remained at a low level in a sideways trend. Sideline entrepreneurs accounted for an increasingly large share. The megatrends are also reflected in start-up activity: labour shortages, demographic ageing and digitalization are visible. However, start-up potential exists and can be exploited. The “entrepreneurial spirit” is above average among younger people. Financial knowledge appears to play an important role in unleashing the entrepreneurial spirit. >more

REMOTELY PRODUCTIVE: THE EFFICACY OF REMOTE WORK FOR EXECUTIVES
Ran Duchin, and Denis Sosyura
2025
We study the efficacy of remote arrangements between CEOs and firms. Such arrangements attract executive talent and help overcome labor market segmentation but introduce frictions. Remote arrangements are associated with lower operating performance, firm valuation, and insider reviews. These effects are stronger when the CEO lives further away and crosses multiple time zones. Using the private costs from uprooting the CEO's spouse as an instrument for the CEO's decision to seek remote work, we validate the performance outcomes. The underperformance is related to the CEO's short-termism, loss of information, and consumption of leisure, such as recreational boats and beach homes. >more

CORPORATE NATURE RISK PERCEPTIONS
Snorre Gjerde, Zacharias Sautner, Alexander F. Wagner, and Alexis Wegerich
2025
We survey companies worldwide on their nature risk perceptions, actions, and investor interactions to provide an early view of an emerging risk. Nearly half view nature risks as financially material. Nature restoration efforts are less widespread than mitigation efforts. Among respondents who experienced investor engagement on nature, three-quarters see it as value-generating, often prompting strategic changes. Many findings have implications for researchers, investors, and policymakers. First, 28% (44%) of companies believe that naturerelated transition (physical) risks already have financial effects, indicating growing urgency. Second, financial effects originate from various stakeholders and sources, making it difficult to capture risks with a few standardized metrics. Third, while 40% state that investors consider nature risks when investing, only about 20% think investors expect nature-related cashflow or cost of capital effects. Fourth, 50% believe that investors prioritize climate over nature; however, half of them think both topics should be valued equally. >more