The main purpose of this article is to understand the determinants of financial inclusion and the determinates of saving and borrowing behavior in the BRICS. This article uses the data from the World Bank Global Findex. As the dependent variables are binary, the Probit model is used to estimate the model. We find that account ownership has increased significantly, but the use of accounts for formal savings and formal borrowing has not picked up in the BRICS. It is also found that being male, wealthy, more educated, and older is associated with greater financial inclusion. Regarding loan-taking motivation, we find poor people tend to borrow mostly for medical purposes and rich for purchasing land and doing business. These results have important implications for financial inclusion policies in the BRICS. The BRICS economies should generally focus on education-promoting policies to enhance financial inclusion. In addition, the government and the central banks should allocate funds and pay attention to the rural areas and female population to promote financial inclusion.
{"title":"Financial Inclusion in the BRICS—Evidence from the World Bank’s Latest Findex Survey","authors":"Farid Ahmed, A. B. Dar, Roopali Sharma","doi":"10.3905/jwm.2022.1.169","DOIUrl":"https://doi.org/10.3905/jwm.2022.1.169","url":null,"abstract":"The main purpose of this article is to understand the determinants of financial inclusion and the determinates of saving and borrowing behavior in the BRICS. This article uses the data from the World Bank Global Findex. As the dependent variables are binary, the Probit model is used to estimate the model. We find that account ownership has increased significantly, but the use of accounts for formal savings and formal borrowing has not picked up in the BRICS. It is also found that being male, wealthy, more educated, and older is associated with greater financial inclusion. Regarding loan-taking motivation, we find poor people tend to borrow mostly for medical purposes and rich for purchasing land and doing business. These results have important implications for financial inclusion policies in the BRICS. The BRICS economies should generally focus on education-promoting policies to enhance financial inclusion. In addition, the government and the central banks should allocate funds and pay attention to the rural areas and female population to promote financial inclusion.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"25 1","pages":"105 - 121"},"PeriodicalIF":0.0,"publicationDate":"2022-03-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45726976","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Australian financial advice industry continues to be the subject of ongoing regulatory reform largely driven by persistent failures of advice and products. Despite these concerns, many Australian consumers continue to have productive, effective, and high-quality relationships with their financial adviser. This article seeks to understand the determinants of quality in these relationships both contemporaneously and how this has changed over time. Deploying a research instrument used in a study in 2009, we compare and contrast the views of practitioners and clients both with updated data and over time. We find once again that systematic differences in the perceptions of professional-client relationship quality exist. We find that these perceptions have changed over time, with high-wealth clients’ perceptions differing from those of other clients, just as the perceptions of more highly educated financial advisers differ from those of advisers with less education. Overall, relationship quality has increased over a number of dimensions.
{"title":"A Move in the Right Direction: Client Relationships in Financial Advice","authors":"K. Hunt, Mark A. Brimble, B. Freudenberg","doi":"10.3905/jwm.2022.1.167","DOIUrl":"https://doi.org/10.3905/jwm.2022.1.167","url":null,"abstract":"The Australian financial advice industry continues to be the subject of ongoing regulatory reform largely driven by persistent failures of advice and products. Despite these concerns, many Australian consumers continue to have productive, effective, and high-quality relationships with their financial adviser. This article seeks to understand the determinants of quality in these relationships both contemporaneously and how this has changed over time. Deploying a research instrument used in a study in 2009, we compare and contrast the views of practitioners and clients both with updated data and over time. We find once again that systematic differences in the perceptions of professional-client relationship quality exist. We find that these perceptions have changed over time, with high-wealth clients’ perceptions differing from those of other clients, just as the perceptions of more highly educated financial advisers differ from those of advisers with less education. Overall, relationship quality has increased over a number of dimensions.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"25 1","pages":"50 - 81"},"PeriodicalIF":0.0,"publicationDate":"2022-03-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47305337","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Sustainable and impact investment assets within private markets have risen significantly over the past two decades, with private investment dollars that seek to create environmental or social impact increasing over twentyfold from 2000 to 2020 (Pitchbook 2021). Yet impact measurement and management remain key challenges for investors and asset owners. In this article, the authors analyze existing approaches to impact measurement and introduce a methodology for calculating and aggregating impact metrics across a private portfolio. This methodology, built based on a mix of leading impact measurement frameworks and insights from expert consultants, provides investors and asset owners with guidance on how to capture, aggregate, and report on impact metrics across an entire portfolio.
{"title":"Impact Measurement Considerations for Private Market Investors","authors":"Kenneth B. Trippe, Essma Bengabsia","doi":"10.3905/jwm.2022.1.166","DOIUrl":"https://doi.org/10.3905/jwm.2022.1.166","url":null,"abstract":"Sustainable and impact investment assets within private markets have risen significantly over the past two decades, with private investment dollars that seek to create environmental or social impact increasing over twentyfold from 2000 to 2020 (Pitchbook 2021). Yet impact measurement and management remain key challenges for investors and asset owners. In this article, the authors analyze existing approaches to impact measurement and introduce a methodology for calculating and aggregating impact metrics across a private portfolio. This methodology, built based on a mix of leading impact measurement frameworks and insights from expert consultants, provides investors and asset owners with guidance on how to capture, aggregate, and report on impact metrics across an entire portfolio.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"25 1","pages":"21 - 29"},"PeriodicalIF":0.0,"publicationDate":"2022-03-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44488359","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The aim of this article is to find out the linkages between financial literacy, behavioral biases, and stock market investment decisions. Further, the primary objective is divided into two parts; first, the relationship between financial literacy and behavioral biases, namely cognitive biases (representative bias, hindsight bias, mental accounting bias, and anchoring bias) and emotional biases (overconfidence, disposition, herding, and familiarity bias) was investigated. Second, the relationship between above stated behavioral biases and stock market investment decisions were explored. To satisfy the objectives of the study, a descriptive cross-sectional research design with judgmental sampling was followed. The data were collected from 477 Indian stock market investors. We found that financial literacy significantly negatively influences all the cognitive biases whereas it does not influence emotional biases. All the cognitive and emotional biases significantly impact the stock market investment decisions. Additionally, it was noticed financial literacy significantly reduces hindsight bias whereas overconfidence bias highly influences the stock market investment decisions.
{"title":"Exploring the Linkages between Financial Literacy, Behavioral Biases, and Stock Market Decisions","authors":"H. Thanki, Sweety Shah, Anushree Karani","doi":"10.3905/jwm.2022.1.164","DOIUrl":"https://doi.org/10.3905/jwm.2022.1.164","url":null,"abstract":"The aim of this article is to find out the linkages between financial literacy, behavioral biases, and stock market investment decisions. Further, the primary objective is divided into two parts; first, the relationship between financial literacy and behavioral biases, namely cognitive biases (representative bias, hindsight bias, mental accounting bias, and anchoring bias) and emotional biases (overconfidence, disposition, herding, and familiarity bias) was investigated. Second, the relationship between above stated behavioral biases and stock market investment decisions were explored. To satisfy the objectives of the study, a descriptive cross-sectional research design with judgmental sampling was followed. The data were collected from 477 Indian stock market investors. We found that financial literacy significantly negatively influences all the cognitive biases whereas it does not influence emotional biases. All the cognitive and emotional biases significantly impact the stock market investment decisions. Additionally, it was noticed financial literacy significantly reduces hindsight bias whereas overconfidence bias highly influences the stock market investment decisions.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"25 1","pages":"82 - 104"},"PeriodicalIF":0.0,"publicationDate":"2022-03-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42562088","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
As a result of recent Treasury regulations, investment partnerships, such as hedge funds, might be required to allocate nonrecourse liabilities to their limited partners (LPs). This allocation of nonrecourse liabilities could result in recognition of capital gains by LPs when they contribute their partnership interests to a charity. We explain how such taxable gains upon charitable contributions arise and quantify how punitive they might be. Although investors in tax-efficient leveraged funds organized as investment partnerships are likely to recognize capital gains upon charitable contributions, when these capital gains are evaluated in the context of tax benefit and pre-tax return opportunities, they do not present a hurdle for tax efficient investing. For charitably inclined leveraged fund investors, the benefits of a fund’s tax efficiency greatly outweigh the capital gain tax liability they might incur upon contribution of their fund holdings to a charity.
{"title":"Taxes, Charity, and Hedge Funds: Tax Implications of Charitable Contributions of Leveraged Partnership Interests","authors":"Nathan Sosner, Roxana Steblea-Lora","doi":"10.3905/jwm.2022.1.165","DOIUrl":"https://doi.org/10.3905/jwm.2022.1.165","url":null,"abstract":"As a result of recent Treasury regulations, investment partnerships, such as hedge funds, might be required to allocate nonrecourse liabilities to their limited partners (LPs). This allocation of nonrecourse liabilities could result in recognition of capital gains by LPs when they contribute their partnership interests to a charity. We explain how such taxable gains upon charitable contributions arise and quantify how punitive they might be. Although investors in tax-efficient leveraged funds organized as investment partnerships are likely to recognize capital gains upon charitable contributions, when these capital gains are evaluated in the context of tax benefit and pre-tax return opportunities, they do not present a hurdle for tax efficient investing. For charitably inclined leveraged fund investors, the benefits of a fund’s tax efficiency greatly outweigh the capital gain tax liability they might incur upon contribution of their fund holdings to a charity.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"25 1","pages":"30 - 49"},"PeriodicalIF":0.0,"publicationDate":"2022-03-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47369422","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-01-31DOI: 10.3905/jwm.2022.24.4.001
Jean L. P. Brunel, Paul Bouchey
{"title":"Editor’s Letter","authors":"Jean L. P. Brunel, Paul Bouchey","doi":"10.3905/jwm.2022.24.4.001","DOIUrl":"https://doi.org/10.3905/jwm.2022.24.4.001","url":null,"abstract":"","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"24 1","pages":"1 - 3"},"PeriodicalIF":0.0,"publicationDate":"2022-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49140332","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In hindsight, few stocks are as acclaimed as Berkshire Hathaway (BRK) for long-term, wealth-generating, market-beating performance, even with its documented higher risk. Do the results apply across holding periods? Do the results hold in foresight? Addressing these questions, we compare the returns, volatilities, and Sharpe reward-to-variability ratios for BRK-A, the S&P 500, and an application of modern portfolio theory (MPT) for evidence of market outperformance in both hindsight and foresight. The period of study is from January 1, 1990 through December 31, 2019. Whether in hindsight or foresight across holding periods, evidence of BRK’s outperformance, in terms of risk-adjusted returns, is mostly elusive. Although investors may still view the stock as a significant wealth generator, they should be circumspect of it as a robust addition to a portfolio.
{"title":"In Search of Market Outperformance: Another Look at Berkshire Hathaway","authors":"A. Loviscek, Kangzhen Xie","doi":"10.3905/jwm.2021.1.163","DOIUrl":"https://doi.org/10.3905/jwm.2021.1.163","url":null,"abstract":"In hindsight, few stocks are as acclaimed as Berkshire Hathaway (BRK) for long-term, wealth-generating, market-beating performance, even with its documented higher risk. Do the results apply across holding periods? Do the results hold in foresight? Addressing these questions, we compare the returns, volatilities, and Sharpe reward-to-variability ratios for BRK-A, the S&P 500, and an application of modern portfolio theory (MPT) for evidence of market outperformance in both hindsight and foresight. The period of study is from January 1, 1990 through December 31, 2019. Whether in hindsight or foresight across holding periods, evidence of BRK’s outperformance, in terms of risk-adjusted returns, is mostly elusive. Although investors may still view the stock as a significant wealth generator, they should be circumspect of it as a robust addition to a portfolio.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"24 1","pages":"90 - 108"},"PeriodicalIF":0.0,"publicationDate":"2021-12-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46856871","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We detail how to extract factor risk, return, and correlation assumptions from a set of asset-class risk, return, and correlation assumptions. Such capital market assumptions are key tools in institutional and high net worth investment operations. Using an institutional investment consultant’s asset-class assumptions, we use our technique to evaluate the implied factor loadings for a demonstration asset class, hedge funds, and find that much of their return comes from factor exposures. Our analytical approach offers useful insight to the veracity of capital market assumptions, key inputs to investment decision making.
{"title":"Extracting Factor Loadings from Capital Market Assumptions: What Is Embedded in Forecast Hedge Fund Returns?","authors":"William W. Jennings, B. Payne","doi":"10.3905/jwm.2021.1.162","DOIUrl":"https://doi.org/10.3905/jwm.2021.1.162","url":null,"abstract":"We detail how to extract factor risk, return, and correlation assumptions from a set of asset-class risk, return, and correlation assumptions. Such capital market assumptions are key tools in institutional and high net worth investment operations. Using an institutional investment consultant’s asset-class assumptions, we use our technique to evaluate the implied factor loadings for a demonstration asset class, hedge funds, and find that much of their return comes from factor exposures. Our analytical approach offers useful insight to the veracity of capital market assumptions, key inputs to investment decision making.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"24 1","pages":"128 - 141"},"PeriodicalIF":0.0,"publicationDate":"2021-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47110365","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study analyzes the risk-adjusted performance of world allocation mutual funds, from January 1994 to March 2021 by comparing them to various benchmark indices. We found that world allocation mutual funds were highly correlated with benchmark indices. They also had lower absolute- and risk-adjusted performance compared to benchmark indices. We also computed the six-factor alpha (Carhart four factors plus excess returns of FTSE Total World Ex US and Barclays Aggregate Bond Index) during this time and found that world allocation funds had significantly negative alpha. All these results indicate that world allocation funds would have been better off with passively managed index funds.
本研究通过将世界配置型共同基金与各种基准指数进行比较，分析了1994年1月至2021年3月世界配置型基金的风险调整后业绩。我们发现，世界配置共同基金与基准指数高度相关。与基准指数相比，它们的绝对业绩和风险调整后的业绩也较低。我们还计算了这段时间内的六因子阿尔法（Carhart四因子加上富时环球指数（FTSE Total World Ex US）和巴克莱综合债券指数（Barclays Aggregate Bond Index）的超额回报），发现世界配置基金的阿尔法显著为负。所有这些结果都表明，如果采用被动管理的指数基金，世界配置基金会过得更好。
{"title":"Evaluating the Performance of World Allocation Funds","authors":"Srinidhi Kanuri, D. Malhotra","doi":"10.3905/jwm.2021.1.158","DOIUrl":"https://doi.org/10.3905/jwm.2021.1.158","url":null,"abstract":"This study analyzes the risk-adjusted performance of world allocation mutual funds, from January 1994 to March 2021 by comparing them to various benchmark indices. We found that world allocation mutual funds were highly correlated with benchmark indices. They also had lower absolute- and risk-adjusted performance compared to benchmark indices. We also computed the six-factor alpha (Carhart four factors plus excess returns of FTSE Total World Ex US and Barclays Aggregate Bond Index) during this time and found that world allocation funds had significantly negative alpha. All these results indicate that world allocation funds would have been better off with passively managed index funds.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"24 1","pages":"74 - 89"},"PeriodicalIF":0.0,"publicationDate":"2021-11-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47202128","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The case aims to serve as a basis for discussing private equity investment strategies in emerging markets such as India, covering the due diligence process, private equity (PE) exit routes, and associated risks. It also focuses on the conflict-of-interest issues when statutory auditors also assume advisory roles.
{"title":"Artjewel: No Treasure for Posh Ventures","authors":"R. Bhat, Papiya De, Amit Shrivastava","doi":"10.3905/jwm.2021.1.159","DOIUrl":"https://doi.org/10.3905/jwm.2021.1.159","url":null,"abstract":"The case aims to serve as a basis for discussing private equity investment strategies in emerging markets such as India, covering the due diligence process, private equity (PE) exit routes, and associated risks. It also focuses on the conflict-of-interest issues when statutory auditors also assume advisory roles.","PeriodicalId":39998,"journal":{"name":"Journal of Wealth Management","volume":"24 1","pages":"109 - 127"},"PeriodicalIF":0.0,"publicationDate":"2021-11-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45078365","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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