ASSET ALLOCATION
and the Business Cycle
Course Outline
Understanding how economic fundamentals influence the returns from bonds and stocks in a changing global environment is essential in determining an optimal portfolio asset mix. This course looks at asset allocation in the context of both business cycle dynamics and structural changes in the world economy, including changing patterns of inflation/deflation, shifts in productivity growth and the increasing incidence of asset bubbles.
The programme will provide an understanding of how bonds and stocks respond to changes in the economy and economic policy. Participants will learn how different asset classes behave over the long term and during the economic cycle. They will learn how to recognise the phases of the cycle and to assess the risks approaching turning points.
All delegates will receive a copy of John Calverley's book "The Investors Guide to Economic Fundamentals" (John Wiley & sons, 2002).
Who The Course is For
This programme is for anyone who wants to understand better the economic forces behind the performance of different asset classes including:
- Chief investment officers
- Asset managers
- Strategists
- Private bank relationship managers
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Prior Knowledge
The more experience the better for this highly interactive, participatory course. Participants should have worked in an investment environment for at least 3 years.
This
program is eligible for 16 Continuing Education credit hours from the
CFA Institute. If you are a CFA Institute member, CE credit for your participation
in this program will be automatically recorded in your CE Diary.
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Day One
Long Term Asset Performance
- Sources of Betas,
- Risk premia and performance,
- What we can learn from historical statistics
Exercise: Strategic Asset Allocation: Exploring asset allocation issues for different kinds of passive investor.
Monetary Policy and Asset Allocation
- How central bankers think
- How monetary policy affects bond markets
- How stock markets react to interest rates and bond yields
Exercise: Monetary Policy Committee: Participants will formulate monetary policy in different scenarios and discuss likely market reactions.
Day Two
Bonds and Stocks in the Business Cycle
- Understanding business cycles
- How asset classes behave during the cycle
- Recognising cycle turning points
Exercise: Tactical Asset Allocation: Using historical scenarios participants working in groups will make their allocations and analyse the results.
Structural Changes in the Economy
- Inflation versus deflation; where next?
- Productivity shocks. Are they for real and how do they affect stocks and bonds?
- The importance of bubbles in the modern economy.
Exercise: Asset Allocation today: Working in groups, participants will propose their allocations and defend them in the Investment Committee!
