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White Papers

White Papers

In-depth, expert analysis on the changing landscape of investments around the world. Leading asset managers reports uncover trends, highlight changes and consider future strategic impact.

GMO - Who Ate Joe's Retirement Money? Sequence Risk and its Insidious Drag on Retirement Wealth

In this white paper, Peter Chiappinelli and Ram Thirukkonda discuss how Defined Contribution plan participants are haunted by an invisible risk called sequence risk (sometimes called sequence-of-returns or path dependency risk), that is, getting the "right" returns but in the "wrong" order.

Sequence risk in the retirement phase has been studied extensively, but not as much attention has been paid to sequence risk during the accumulation phase. Sequence risk rears its head in this way:

Even if an individual employee does everything "right" - participates in the plan, defers income religiously, takes full advantage of the company match, and even gets his exact expected return from his investments - he can still fall victim to disappointing final wealth outcomes if the order of those returns works against him.

Current models of asset allocation – the most popular being static, or predetermined, target date glide paths - "know" that sequence risk exists, but behave as if there is nothing that can be done to mitigate it. Valuation- based dynamic allocation, on the other hand, can help soften the bite.

Company: GMO
Date added: 11-11-2015
Sector: Risk Management

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GMO - China – King Canute Holding Back the Waves?

In this Emerging Thoughts piece, Arjun Divecha discusses the efforts of the Chinese government to slow the recent decline of its stock market.

Company: GMO
Date added: 01-10-2015
Sector: China

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GMO - The Idolatry of Interest Rates, Part II: Financial Heresy and Potential Utility in an ERP Framework

In this white paper, James Montier continues his discussion of the idolatry of interest rates with "Financial Heresy," while Ben Inker offers a counterpoint to James' thesis.

Company: GMO
Date added: 01-10-2015
Sector: Briefing - Investment

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GMO European Quarterly Update – June 2015

Q2 2015 GMO European Quarterly Update includes market commentary on all major asset classes as well as performance and characteristics of GMO's strategies.

Company: GMO
Date added: 01-10-2015
Sector: European Equities

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GMO's 7-Year Asset Class Forecast as of September 2015

GMO's 7-Year Asset Class Forecast as of September 30, 2015

Company: GMO
Date added: 01-10-2015
Sector: Briefing - Investment

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GMO - Intro to Farmland

Farmland is a real asset that combines solid investment fundamentals with the potential for attractive cash yields,

inflation hedging, and consistent returns from biological growth. Furthermore, farmland total returns tend to be

uncorrelated with financial asset returns, offering genuine portfolio diversification for institutional investors. While

institutional ownership within the asset class has grown steadily over the past few years, it still accounts for less than 1% of total global agricultural land ownership, presenting significant opportunity for sustainable yield enhancement

through targeted farmland investment in certain regions.

Company: GMO
Date added: 01-10-2015
Sector: Farmland

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GMO - Renewable Resources: Timber Investment Overview

Timber investments consist of growing trees and the productive land that supports them. The
trees can be growing in either natural forests or, more typically, plantations. They can be
softwoods (trees with needles such as pine, firs, hemlock, and spruce) or hardwoods (trees with
leaves such as cherry, oak, maple, and eucalyptus). Direct timber investments achieve a return
for investors through cash flow derived from harvesting trees (with some additional forms of
income such as leases) and resale of the asset based on the value of the trees and/or the
underlying land at the time of sale. Timber investments, by their nature, are long-term illiquid
investments which investors generally access through closed-end funds or separate accounts.
Separate accounts typically require a significant minimum investment, but offer investors a
greater measure of control. Open-ended funds and publicly-traded REITs offer more liquidity,
but the performance of public REITs tends to be influenced by capital market trends and other
factors apart from the underlying timber investment.

Company: GMO
Date added: 01-10-2015
Sector: Real Assets

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