The Financial Crisis of 2008/2009 increased plan sponsors' desire to control risk — and we are still seeing the unfortunate effects. Many approaches adopted to control risk are illusions of risk control. Of particular concern is how sponsors are misapplying tools designed to monitor...

“In this world nothing can be said to be certain, except death and taxes.” — Benjamin FranklinThe Brandes Institute has added a third inevitability to Ben Franklin's famous quip about life's certainties: short-term underperformance among active managers. Over the years, Institute research...

Global micro-cap stocks have provided greater diversification benefits and a more robust long-term value premium than small- and mid- to large-cap stocks. Among the features contributing to these benefits for micro caps worldwide:• a large, diverse universe with little sell-side research...

Risk parity is an asset allocation strategy designed so each asset class contributes equally to overall portfolio risk (as measured by volatility). While risk parity offers potential advantages, its success hinges on key assumptions and a favorable environment for bonds. Like the traditional...

Over the years, Institute research has shown active managers, even the best-performing ones, suffered periods of weak returns relative to benchmarks and their peers. But underperformance, up to three years, had relatively little impact on the best-performing funds' ability to deliver success...

Unlike traditional bonds, Floating-rate bonds (FRB) do not have a fixed rate coupon. Instead, their rate fluctuates or floats based on the market plus a spread. As a result, FRBs tend to be less vulnerable to interest-rate fluctuations. Many believe FRBs can help preserve principal, while...

Americans are rapidly losing their pensions — replaced by savings plans disguised as retirement plans.Many sponsors view defined contribution (DC) plans as the best option for retaining some of the features of a pension plan without bearing all of the costs and risks of DB. This paper explores...

In the United States and in several other wealthy countries, the demographic and financial problems facing retirees are (finally) getting attention as the costs grow so large that they clearly will impact every member of society through tax hikes, cuts in services or both. Long-term solutions at...

During the last two decades of the twentieth century, the investing world saw declining dividend and bond yields, with prices generally moving higher for both equities and bonds over the period. In the early years of this century, investors seemed to belittle the importance of income as a...