Decades of Low Returns, RBS’s Libor Settlement, High-Yield Rally, and More
Here are some of the most popular stories from this week’s CFA Institute Financial NewsBrief.
Two to Three Decades of Low Returns Await Investors, Report Says
For the next 20 to 30 years, annualized worldwide returns on equities will reach 3% to 4% and less than 1% on bonds, according to a report by London Business School and Credit Suisse. Since 1980, real returns on equities and bonds have exceeded 6%, but those days are over, the report says. Many institutions still assume “unrealistic” returns of 6 to 8 percentage points higher than inflation, the report says. Pensions & Investments (free registration)
RBS’s Libor Settlement Reveals Central Figure
A figure has emerged from Royal Bank of Scotland’s settlement related to alleged manipulation of the London Interbank Offered Rate. Trader Tom Hayes traveled from lender to lender, making contacts needed to manipulate the benchmark, regulators say. Meanwhile, RBS executives told the U.K. Parliamentary Commission on Banking Standards that they thought manipulating Libor was not possible. Bloomberg, MarketWatch, New York Times (tiered subscription model)
Einhorn Seeks to Prevent Apple Proxy Vote in Court
David Einhorn, president of Greenlight Capital, is seeking an injunction against Apple’s proposed proxy vote, which would change its corporate charter to eliminate preferred stock. Einhorn, who says he owns 1.3 million shares of Apple, has called for the company to spend its cash pile on a dividend. Reuters, Wall Street Journal, New York Times (tiered subscription model), Financial Times (tiered subscription model)
Janus “Absolute Return” Fund Comes with Twist
Janus Capital Group is launching its 18th investment strategy, the Janus Diversified Alternatives Fund, since CEO Richard Weil took the reins in 2010. With the latest fund, Janus is striving to rethink the way investors treat risk. Denver Post
Fed Warns of High-Yield Rally Encouraged by Monetary Policy
Federal Reserve Governor Jeremy Stein warned that the speculative-grade debt market, which has expanded rapidly largely in response to the central bank’s monetary policy, is overheating. “We are seeing a fairly significant pattern of reaching-for-yield behavior emerging in corporate credit,” he said. Bloomberg
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