Monthly Archives: December 2014

Defining ‘closet tracking’ is a hotbed of regulatory arbitrage

Jean-Pierre Casey, 10* December 2014

The active versus passive investment debate has taken a new turn. Esma, the European watchdog of securities markets, is to take a closer look at so-called “closet trackers”, with a view to identifying whether a co-ordinated pan-European policy response is needed.
The fact that many active fund managers are not able to beat market indices consistently on a risk-adjusted basis and/or net of fees — and yet still charge management fees that can be multiples of passive strategies — suggests that passive investments such as exchange
traded funds ought to occupy a greater share of investment portfolios. Continue reading

Does Europe need an investment plan?

Roxana Sandu, 05 December 2014

To put it simply, yes. Although high level of financial liquidity exits, Europe suffers of little economic growth. Therefore, there must be the case that there exists a problem of transmission. The question is: does the Junker plan solve it?

Once again the answer  may be yes. The Junker investment plan has 2 main objectives: to increase liquidity and also the number of investment projects. It basically creates an investment plan for Europe with 2 main partners to begin with: the EC (i.e. 16 billion) and EIB (i.e. 5 billion), and aims to set a pipeline for projects and create the right environment for investment. At a later stage,  Member States and additional stakeholders are expected to join in, such as National Promotional Banks, regional authorities and private investors, with the objective of mobilizing by 2017, 315 billion Euro of public and private investments into the real economy. Continue reading