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Aon Retirement and Investment Blog

Aon Investment-Related White Papers

This blog lists many of the major white papers we have written recently, including short descriptions and a link to the full papers. Papers of specific regional interest are labeled as follows: Global, U.S. is United States, CA is Canada, and U.K. is United Kingdom. If you wish to discuss any of these pieces further, please feel free to contact the authors (their contact info is usually shown on the last page of each paper), your Aon Hewitt consultant, or retirement@aonhewitt.com.

How Do Public Pension Plans Impact Credit Ratings? This paper details how public pension plans influence credit ratings as well as the relationship between credit ratings and borrowing costs for public entities.  Additionally, the paper outlines effective actions that plan sponsors can take today seek to improve the impact a pension plan has on its locality’s credit rating. (December 2017)
Alternative Premia, Alternative Price. This paper discusses the rise in popularity of alternative risk premia (ARP), which consist of a wide range of strategies for investors looking for alternative sources of return with reasonable fee levels.  This research discusses a range of strategies that offer a premium for taking unpopular risks or for exploiting persistent market anomalies. The research also details risks and areas of consideration. (August 2017)
MSCI’s Announcement to Add China A-Shares to Its Emerging Markets Index. This paper explains the background of the index change, discusses the possibility of future changes in the index composition, and points out the potential implications on market participants if China A-Shares are fully included as MSCI illustrates.  (August 2017)
Emerging Market Equities: Still Plenty of Upside? This paper examines emerging market equities, and provides our medium term views for that space. (July 2017)
The Third Dimension – Credit Path: Redefining Dynamic Management of Pension Risk.  This paper discusses “Credit Paths,” which is another way to improve your dynamic investment policy.  (July 2017)
Public Funds Can Still Compete. This paper updates our studies from 2003 and 2011, comparing performance of public pension plans relative to endowments and foundations.  (July 2017)
Making Portfolios More Fee-Efficient. Investment management fees are highly relevant to portfolio performance. Making portfolios more fee-efficient is not necessarily about reducing fees. Rather, it is about paying for things that add value, and not paying for things that don’t. While efforts often focus on asset allocation and manager selection, it is also important to negotiate aggressively and combine skilled managers in the most fee-efficient way. We describe a toolkit of approaches for making portfolios more fee-efficient.  (July 2017)
U.S. Plan-Specific Mortality Studies: A Call to Action. The business case for mortality studies is stronger than ever before. These studies inform plan design, potentially save cash and insurance premiums, and improve financial reporting. We believe plan sponsors should evaluate whether to act now to prepare for impending final regulations, a surge in annuity transactions, and intensifying pressure from auditors. (June 2017)
Managing Health Care Reserves: Aligning Operating Assets with Broader Organizational Goals. According to the American College of Healthcare Executives’ 2016 annual survey of top issues confronting hospitals, financial challenges continued to rank as #1. It becomes critical to consider the interlinked effects from changes in investments and in financial metrics within an Enterprise Risk Management (ERM) framework. Find out more about this in this paper on aligning operating assets with broader organizational goals. (June 2017)
Non-Profit Key Topics. This paper identifies and provides context on six key topics we expect to be important for non-profit fiduciaries in 2017.  (May 2017)
Onshore Chinese Bonds Enter the Global Universe. China’s large onshore bond market is becoming increasingly open and transparent and its entry into bond indices will have a big impact on index composition and, consequently, bond investing. This piece examines Chinese financial market developments, characteristics of the Chinese bond market, and opportunities and risks associated with the opening of the Chinese bond market. (March 2017)
Think Big By Going Small. Active institutional equity portfolios, in aggregate, are underweight to global small-caps relative to a broad benchmark. Global small-cap is a well-diversified universe with fundamentally differentiated market structure when compared against large-caps. It also appears to have a risk-adjusted returns profile such that an allocation could incrementally enhance existing equity portfolios. In this paper, we call on investors with an active global equity framework to examine their level of global small-caps exposure and consider whether additional allocations, either passively or actively managed, are appropriate.  (March 2017)
Managed Futures as a Source of Portfolio Diversification. Managed futures strategies can be appropriate for investors looking for a lower-governance, liquid alternatives strategy that can improve portfolio efficiency. (February 2017)
2017 Hot Topics in Retirement and Financial Wellbeing. Employers are taking action to bolster employee benefits and help their workers plan for a secure financial footing—both today and in retirement. By looking at the trends shown in this report, employers can help benchmark their offerings against those of other companies and help craft their benefits offerings to better align with their overall objectives. (January 2017.)
Optimal Number of Managers in an Equity Portfolio. This paper addresses over-diversification in equity portfolios. One cause of this over diversification is the country/regional/style box approach followed by some investors. We believe global equity strategies are the most efficient portfolio building block to construct a sensibly diversified portfolio. One possible benefit to streamlining a portfolio structure, in addition to simplified monitoring, is a reduction in fees. The paper provides step‑by‑step suggestions for attaining a more efficient portfolio, recognizing that the asset size, team structure, and governance can make it difficult to dramatically change a portfolio.  (January 2017)
Thought leadership materials prior to 2017 can be found here.

The information contained above should be regarded as general information only. That is, your personal objectives, needs or financial situation were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of acting on this information, particularly in the context of your own objectives, financial situation and needs. Nothing in this document should be treated as an authoritative statement of the law on any particular issue or specific case. Use of, or reliance upon any information in this post is at your sole discretion. It should not be construed as legal, tax or investment advice. Please consult with your independent professional for any such advice. The information contained within this blog is given as of the date indicated and does not intend to give information as of any other date. The delivery at any time shall not, under any circumstances, create any implication that there has been a change in the information since the date of publication, or any obligation to update or provide amendments after the original publication date. The blog content is intended for professional investors only.

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