Cambridge Associates: Risk Allocation Framework

The most recent step in the evolution of portfolio construction practices has been a shift from an asset allocation–centered process to a more comprehensive risk allocation–based process. Cambridge Associates’ Risk Allocation Framework considers multiple dimensions of risk and return trade-offs when building portfolios and evaluates the consequences of risk allocation decisions during normal and stressed markets.

Yet the problem became that several of these more recently introduced “asset classes” actually have common risk factors that cross “asset class” boundaries. Examples include equity risk in distressed securities and natural resources equities, and illiquidity risk in hedge funds and commingled funds particularly in stressed environments. Thus it became increasingly difficult to recognize, without significant analysis, just how much equity risk (for example) might be embedded in a portfolio that owned lots of assets not named “equities.”

To clarify matters, investors increasingly have constructed portfolios on the basis of the role they expected different kinds of investments to play in the portfolio (i.e., role-in-portfolio exposures), even if they still allocated investments to traditional asset classes.

The Risk Allocation Framework takes this evolution a step further by considering not only the role that different investments might play in the portfolio, but how and in what ways such investments contribute to or mitigate various forms of portfolio risk. The framework combines careful attention to risk allocation in the context of the risk sensitivities and limitations of a long-term investment portfolio (LTIP) given its role in the broader organization. Since risk exposures move over time, we monitor risk allocation and performance attribution dynamically.

Cambridge Associates: The Risk Allocation Framework

The most recent step in the evolution of portfolio construction practices has been a shift from an asset allocation–centered process to a more comprehensive risk allocation–based process. Cambridge Associates’ Risk Allocation Framework considers multiple dimensions of risk and return trade-offs when building portfolios and evaluates the consequences of risk allocation decisions during normal and stressed markets.

Yet the problem became that several of these more recently introduced “asset classes” actually have common risk factors that cross “asset class” boundaries. Examples include equity risk in distressed securities and natural resources equities, and illiquidity risk in hedge funds and commingled funds—particularly in stressed environments. Thus it became increasingly difficult to recognize, without significant analysis, just how much equity risk (for example) might be embedded in a portfolio that owned lots of assets not named “equities.”

To clarify matters, investors increasingly have constructed portfolios on the basis of the role they expected different kinds of investments to play in the portfolio (i.e., role-in-portfolio exposures), even if they still allocated investments to traditional asset classes.

The Risk Allocation Framework takes this evolution a step further by considering not only the role that different investments might play in the portfolio, but how and in what ways such investments contribute to or mitigate various forms of portfolio risk. The framework combines careful attention to risk allocation in the context of the risk sensitivities and limitations of a long-term investment portfolio (LTIP) given its role in the broader organization. Since risk exposures move over time, we monitor risk allocation and performance attribution dynamically.

Go Green Business: Pukka Herbs has achieved carbon neutral status

Pukka’s climate change policy was written by their sustainability manager, taking guidance from other policies available online. It is a short, one page document that everyone in the organisation can understand. A gap and impact analysis was carried out for the commitments made in the policy which was necessary to secure board-level approval.  The policy was approved and a plan was produced to measure emissions from gas, electricity, water, waste and travel using EnergyDeck , whilst freight and refrigeration, emissions were monitored using the Department for Environment Food and Rural Affairs (DEFRA) emission factors. Monitoring only takes about one hour a month of Anne’s time.

Since monitoring began, Pukka have implemented a range of emission reduction projects and unavoidable emissions within their financial control were offset.  They made carbon neutrality a company level objective, with each department considering carbon reduction opportunities in their overall plan and all team members were encouraged to set themselves a non-compulsory objective in their individual performance and development plans.

At the end of Pukka’s financial year, its carbon footprint was calculated and verified by external consultants. Unavoidable carbon emissions were offset by purchasing offset credits for an efficient cookstove project in Africa, provided through Carbon Footprint Ltd. Pukka chose this option because it offered a credible Gold Standard project with the lowest cost (£6.30 per tonne) that also aligned with Pukka’s values of improving health (through reduced smoke inhalation from open fires) as well as reducing deforestation

Singapore Huxley Associates: Top 5 bizarre interview questions

There’s an apocryphal story that has been bandied about for years, about an interview where the interviewer asked a candidate: “Do something to surprise me”. The interviewee got out his lighter and set fire to the interviewer’s newspaper. It’s not an action we would advise emulating, but very definitely comes under the heading of utterly incomprehensible interview questions. "Why do these questions get asked" is a tricky question to answer, but as it appears to have started in Silicon Valley during the tech boom its roots are likely to be found in the free-thinking, mould-breaking philosophy that many of the tech pioneers applied to their businesses.

First and foremost you should remember there isn’t a right answer, depending on the nature of the question, which these questions are about your thought processes, your coolness under pressure, your personality and your approach to problem solving. What you don’t do is say, “I don’t know”, or “that’s a good question” and stare off into space. Let’s take the question: “How many cricket bats are there in the world?” You could either pluck an answer out of thin air: “Three million?”, or go about figuring out how to work it out. “Well, if the population of the sporting public in the UK is X, and a tenth of them play cricket, then that’s XX for the UK, plus another X for the cricketing population in India…” etc. This is the sort of approach the employer would be looking for.

Five types of questions you might encounter

1. Lots of these questions fall along the lines of if you were a colour/an animal/a garden gnome/a car/a food/a computer application (yes, really) what one would you be and why? Try to think of the qualities of the object and how they might relate to your skills or character.

2. What are all the different uses you can think of for a lemon? Apparently asked during an interview for an airline pilot, this type of question is designed to find out how much of a creative thinker you are.

3. Who would you invite to a dinner party/what superhero/movie character would you be/who is your role model? In other words, what character traits do you most admire in other people and why? Think about what specific things they have achieved and what it is about those achievements that you admire so much.

4. How many people will be on Facebook in New York on a Friday afternoon? There are a raft of questions that are much more technical in nature and much more aligned to the role you are seeking. This question was aimed at a marketing executive, and was probing how well they understand the use of social media around the world.

5. Tell me a story. This is a firm favourite, and represents a golden opportunity for you to tell a work-related anecdote that is also relevant to the role in question and also illustrates how you see other people and the world around you.

Huxley Associates International: Why are UK banking jobs moving out of London?

Banking jobs are down in the UK. With every month comes a headline announcing the latest swathe of job cuts by a UK bank: RBS to cut almost 450 investment banking jobs in the UK (March 2016); Lloyds Banking Group to cut 1,755 jobs and close 29 branches (February 2016), Barclays to axe 1,200 jobs worldwide (January 2016).

Despite this overall downward trend, regionally, jobs in the banking sector are increasing. Between 2013 and 2014, the number of banking jobs decreased by 4,848 in London but increased outside of London by 2,450. Since 2012, the difference is even more apparent: the number of banking jobs decreased by 4,497 in London but increased outside of London by 5,251. In 2014, 77 local authorities in Britain had faster growth in banking jobs than anywhere in London.

“The nearshore model is gaining increasing focus by a lot of banks,” says Sachin Gupta, Business Manager, Huxley Banking & Finance. “Companies have identified that there is a definite talent pool outside of the capital and are taking advantage of that.”

According to the BBA report, there are several major cities outside of London that are banking workforce hubs. Birmingham’s banking cluster is a vivid example of this, but far from the only one, says the report. In addition to Birmingham, in Manchester, Leeds, Bristol and Edinburgh the concentration of banking jobs is also significantly higher than the national average: banking jobs account for 1.7% of total employment in Great Britain, whereas in these cities such jobs range from 2.2% to 6.5%.

Unlocking Africa’s Potential through Competition Policy

African countries have much to gain by encouraging open and competitive markets, particularly as a means to spur sustainable economic growth and alleviate poverty. Yet in reality, many markets have low levels of competition. More than 70% of African countries rank in the bottom half of countries globally on the perceived intensity of local competition and on the existence of fundamentals for market-based competition. Monopolies, duopolies, and oligopolies are relatively prevalent compared to other regions. In more than 40% of African countries, a single operator holds over half the market share in telecommunications and transport sectors.

This lack of competition has drastic costs. Retail prices for 10 key consumer goods – white rice, white flour, butter and milk among them -- are at least 24% higher in African cities than in other main cities around the world. While these higher prices affect all consumers, the poor are hit the hardest. A new report from the World Bank Group and the African Competition Forum, Breaking Down Barriers, estimates the gains from tackling anticompetitive practices and reforming policies to enable competition. For instance, reducing the prices of food staples by just 10%, by tackling cartels and improving regulations that limit competition in food markets could lift 500,000 people in Kenya, South Africa, and Zambia out of poverty and save consumers more than $700 million a year.

Cartels - agreements among competitors to fix prices, limit production or rig bids - are a serious cause of low competition levels in African countries and have been found to affect products in a variety of sectors, including fertilizers, food, pharmaceuticals, construction materials, and construction services. Evidence reveals that consumers pay 49 percent more on average when firms enter into these agreements. “There have been a notable number of countries adopting competition laws in Africa, and this bodes well for growth and development. However, while the benefits of competition are already clearly observable in Africa, there is still considerable effort required to ensure effective implementation of competition laws and policies across the continent,” notes Tembinkosi Bonakele, Chairperson of the African Competition Forum headquartered in South Africa.

In addition to explaining the costs of low levels of competition, Breaking Down Barriers highlights the important progress many African countries are making in improving competition policies. For instance, the number of countries and economic communities like EAC, COMESA and ECOWAS with competition laws has nearly tripled in 15 years. There are now 25 functional competition authorities in Africa and budgets for those authorities increased by 39% between 2009 and 2014.

“In the past few years, several countries have stepped up their enforcement capacity and implementation of competition laws. For example, Egypt, Kenya, South Africa and Zambia have taken recent actions to block uncompetitive agreements in a variety of sectors,” explains Martha Martinez Licetti, the report’s co-author and Lead Economist for the Trade & Competitiveness Global Practice at the World Bank Group. “Looking to the future, there is a need to prioritize resources and use the powers and tools available to competition authorities more effectively in order to continue raising the relevance of competition policy within the broader development agenda.”

Pugh Heating & Air Conditioning: Role of gas heaters in your home

Natural gas furnaces are a trend these days and a lot of homeowners prefer to use it according to Pugh Heating & Air Conditioning. Apparently, it is currently the most popular home heating option in the market. Its efficient characteristic can also reduce the impact on the environment since its byproducts are only water vapor and small amounts of carbon dioxide.

Moreover, natural gas has barely any emissions of any home heating fuel. Gas heaters need venting to your home's chimney in order to eradicate the carbon dioxide made from your home but make sure to understand the exact venting requirements building and safety codes in your area first.

Natural gas as a heating fuel also has its disadvantages, including it is flammable, can be toxic if a large amount is inhaled, the exhaust produced when burning natural gas known as carbon monoxide is poisonous, and some rural and urban areas don't have access to the current network of underground pipes.

Fire departments often recommend the use of a carbon monoxide detector because this kind of gas is completely odorless. On the other hand, gas companies add a scent to the natural gas to make leaks noticeable. Looking for trustworthy heating systems on the web is simple, just avoid fraud services online. Consider security firms that offer service protection in purchasing items online. Pugh Heating & Air Conditioning can also help you with some alternative heating systems like boilers or hot boilers, water heaters, and garage heaters.

Pugh Heating & Air Conditioning: Reasons to have air conditioning

When looking for a trustworthy organization, avoid fraud services online because fraudsters often disguise themselves as representatives from a genuine company and offer their services to you in exchange of your personal and financial information.

Pugh Heating & Air Conditioning can perform proper air conditioning service and installation for your home and can help you decide which AC installation is the best for your particular property. You can also schedule installing air conditioning to your home before summer actually begins to their team. This specific home improvement service has great benefits for your home and listed on the following are the reasons why you should have one today:

Even though it is scorching hot outside, you can still have a cool temperature inside your home with an air conditioner that is connected to a programmable thermostat. You can enjoy its steady and cool temperature throughout the day. A new AC system ensures that you will not suffer from the strong heat outside during the summer season.

Air conditioners don’t only provide a cool and comfortable temperature for your home, but it can also purify your indoor air. It delivers all your cooled air through an air filter before air conditioners can actually provide climate controlled air to your home. This air filter will remove dirt, dust, and other allergens while purifying your indoor air.

Some people often get irritated with a hot temperature which also makes them hot-headed in an instant. Because of this, the introduction of air conditioning has been their lifesaver. You can easily and quickly cool your home with a single push of a button where you can enjoy its cool temperature and relax your mind at the same time. You can also avoid heat-related illnesses during summer's strong heat with air conditioning. In case you have further inquiries, Pugh Heating & Air Conditioning will provide you with more information about air conditioning maintenance and installation.