NEWSLETTER of May 31, 2019

The following content has been added at finexpert:

BlackRock

THE CORE ROLE OF PRIVATE MARKETS IN MODERN PORTFOLIOS

Making effective use of private assets is increasingly important for institutional investors. Our work indicates that many of them have room for relatively large allocations, depending on risk tolerance and their specific objectives. With private equity in particular playing a key role in many portfolios, we also offer a new method of estimating PE returns. >more

J.P. Morgan

GLOBAL PENSIONS ASSESS A CHANGING INDUSTRY

As institutions move from traditional Defined Benefit (DB) to Defined Contribution (DC) plans, trustees and board members are striving to increase participation and engagement while still retaining a strong focus on meeting their funding obligations. Plan design, corporate governance and the changing attitudes of millennials also put performance, transparency and ESG in the spotlight. Our polling reflects the views of representatives from 56 institutions, representing 14 countries and nearly US$1.2 trillion in pension assets. >more

Bain & Company

INSURTECHS ON THE RISE

The digital revolution that has upended so many industries has been relatively slow to take hold in life and health insurance. But things are changing. In all the world’s major markets, insurtechs are springing up to challenge incumbent life and health insurers. While the number of life and health insurtechs is still small, it is growing rapidly, posing a significant threat to established players. >more

Deloitte

DER NEUE KREDITRISIKOSTANDARDANSATZ NACH BASEL IV

As a result of the adoption of CRR II, banks are currently paying particular attention to the imminent changes in capital requirements. In this White Paper, Deloitte describes the new regulations and also addresses the data requirements. In the course of test calculations, it has been shown that information is often missing in order to be able to calculate the new KSA correctly. From this, the need for action for IT can be derived. >more

CREDITOR CONTROL OF CORPORATE ACQUISITIONS

David Becher, Thomas P. Griffin, and Greg Nini
2018
We examine the impact of creditor control rights on corporate acquisitions. Nearly 75% of private credit agreements restrict borrower acquisition decisions. Following a covenant violation, creditors use their bargaining power to tighten these restrictions and limit acquisition activity, particularly deals expected to earn negative announcement returns. Firms that do announce an acquisition while in violation of a covenant earn 1.8% higher stock returns, on average, with the effect concentrated among firms with weak external governance. We conclude that creditors provide valuable corporate governance that benefits shareholders by reducing managerial agency costs. >more

HOW DO FINANCIAL EXPERTISE AND NETWORKS AFFECT INVESTING? EVIDENCE FROM THE GOVERNANCE OF UNIVERSITY ENDOWMENTS

Matteo Binfarè, Gregory W. Brown, Robert S. Harris, and Christian T. Lundblad
2019
We examine the link between endowment investment performance and the expertise of university board members. Harnessing detailed information on 11,019 members for 579 universities, we find that expertise in alternatives and larger professional networks are associated with higher allocations to alternatives and better investment results. Expertise and networks appear particularly important in private equity and venture capital, which are difficult to analyze and manage. The improved investment performance arises because endowments capture higher returns that can accompany alternative assets, select or have access to high performing managers, and minimize fees by using direct funds rather than funds of funds. While identification of a causal effect of expertise and networks on allocations and performances is challenging, we conduct a novel survey of 132 endowment managers and boards (collectively over 60% of endowment assets), and confirm that board expertise is central in facilitating alternative asset investments. >more