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Article
Publication date: 1 January 2004

Jedd Wider and Kevin Scanlan

On September 29, 2003, the staff (“Staff”) of the Division of Investment Management of the U.S. Securities and Exchange Commission (the “SEC”) issued a report to the SEC entitled…

Abstract

On September 29, 2003, the staff (“Staff”) of the Division of Investment Management of the U.S. Securities and Exchange Commission (the “SEC”) issued a report to the SEC entitled the “Implications of the Growth of Hedge Funds” (the “Report”). The Report recommends amending Rule 203(b)(3)‐1 of the Advisers Act to require a hedge fund manager to “look through” each existing client and count each of the hedge fund’s underlying beneficial owners as a “client” of the hedge fund manager for the purpose of determining whether an investment adviser has 15 or more clients and therefore must register under the U.S. Investment Advisers Act of 1940. Such a registration requirement effectively would increase the minimum investment requirement for a hedge fund. The Report does not necessarily support the argument that subjecting hedge funds to periodic examinations by the SEC will help in early detection of fraud and prevention of resulting investor losses. Despite the Staff’s intentions to identify distinctions between customary hedge fund vehicles and other types of investment funds, no clear hedge fund definition or standard was provided in the Report. As a result, there is a danger that the scope of new hedge fund regulations will be too broad

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Journal of Investment Compliance, vol. 4 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 1 February 2002

THOMAS A. AYERS and ERIC BYRNES

This article examines the recent phenomenon of investment advisors' and mutual fund complexes' creation of alternative investment products such as private investment funds. It…

Abstract

This article examines the recent phenomenon of investment advisors' and mutual fund complexes' creation of alternative investment products such as private investment funds. It explores the reasons behind the popularity of these investment vehicles.

Details

Journal of Investment Compliance, vol. 2 no. 4
Type: Research Article
ISSN: 1528-5812

Article
Publication date: 3 July 2017

Lukas Prorokowski

To explain the shadow banking regime that will be enforced in the European Union by local regulators starting in January 2017.

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Abstract

Purpose

To explain the shadow banking regime that will be enforced in the European Union by local regulators starting in January 2017.

Design/methodology/approach

Recognising the regulatory-induced difficulties in the process of identifying certain types of clients (investment funds) as shadow banking entities, this article provides a decision tree for the shadow banking classification process in order to aid the impacted institutions with the assessment of their clients. With this in mind, the article advises the impacted institutions on the specific steps that should be taken when assessing investment funds for shadow banking flags. Furthermore, the article provides insights into the information required to conduct the shadow banking classification process.

Findings

The regime requires the impacted institutions to assess their clients for shadow banking flags in order to impose limits on credit lines to clients classified as shadow banking entities. The US regulatory jurisdiction will be impacted over a longer term.

Originality/value

The recommendations in this article will be especially useful for investment funds to ensure that the relevant information is clearly stated in their prospectuses in order to avoid being classified as shadow banking entities.

Article
Publication date: 1 December 2020

Robert L. Sichel, William P. Wade, Ruth E. Delaney, Kristina M. Zanotti and Michael McGrath

To explain recent regulatory guidance for different types of stakeholders, including asset managers, fund complexes, and institutional investors.

Abstract

Purpose

To explain recent regulatory guidance for different types of stakeholders, including asset managers, fund complexes, and institutional investors.

Design/methodology/approach

Summary of recent regulatory guidance and explanation for different types of stakeholders, including asset managers, fund complexes, and institutional investors.

Findings

While the U.S. Department of Labor’s (DOL’s) letter does not open the door to direct access to Private Market Investments by 401(k) plan participants, it does provide a framework for the expanded use of private equity and, we believe, other types of Private Market Investments in managed asset allocation funds such as target date funds.

Originality/value

Practical guidance from experienced asset management and investment funds and ERISA lawyers.

Details

Journal of Investment Compliance, vol. 21 no. 2/3
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 1 October 2006

Emil Boasson, Vigdis Boasson and Joseph Cheng

To examine the rationale for the investment principles adopted by faith‐based funds from a biblical perspective and to evaluate the performance of faith‐based ethical funds.

2522

Abstract

Purpose

To examine the rationale for the investment principles adopted by faith‐based funds from a biblical perspective and to evaluate the performance of faith‐based ethical funds.

Design/methodology/approach

A multi‐factor Carhart model is applied to examine the risk‐adjusted financial performance and investment strategies of faith‐based ethical funds.

Findings

The statistical results indicate that the faith‐based funds as a group do not under‐perform the market on a risk‐adjusted basis.

Practical implications

This suggests that investment managers may incorporate moral/ethical components into their investment decisions without unduly shortchanging their clients for whom they have fiduciary duties.

Originality/value

This is one of the very few papers which study faith‐based funds.

Details

Managerial Finance, vol. 32 no. 10
Type: Research Article
ISSN: 0307-4358

Keywords

Abstract

Details

Investment Traps Exposed
Type: Book
ISBN: 978-1-78714-253-4

Book part
Publication date: 21 May 2021

Tehmina Khan and Peterson K. Ozili

Purpose: Ethical investing is considered to be the pinnacle of embedding environmental considerations in investing. Environmental considerations form a major part of corporate…

Abstract

Purpose: Ethical investing is considered to be the pinnacle of embedding environmental considerations in investing. Environmental considerations form a major part of corporate social responsibility (CSR), and CSR is considered to have a positive effect on investment returns. The purpose of this chapter is to assess the degree of environmental considerations embedded in faith-based funds investment criteria. The comparative analysis between principles and practice through faith-based investing is undertaken.

Design/Methodology: Prospectuses of selected faith-based mutual funds and other information around investment strategies provided on the Funds’ websites have been analyzed in detail. Content analysis has been undertaken in order to evaluate the existence and types of environmental related criteria demonstrated by the Funds. The criteria are compared to the faith principles on environmental responsibility.

Findings: It is generally assumed that CSR requirements form the premise of socially responsible investing. The authors find that faith-based investing criteria are narrowly defined and that they represent biases which do not promote environmentally responsible investing.

Implications: The major implication is that inspite of the availability of faith-based environmental responsibility principles, faith-based funds represent a case of economic returns prioritization over environmental considerations. Environment accountability principles that exist need to be promoted regularly so that they become an essential element of every day decision-making including faith-based economic decision-making.

Originality: This study contributes to the debate on ethical investing from the perspective of faith-based mutual funds.

Details

New Challenges for Future Sustainability and Wellbeing
Type: Book
ISBN: 978-1-80043-969-6

Keywords

Book part
Publication date: 27 September 2011

Narjess Boubakri, Jean-Claude Cosset and Nabil Samir

Purpose – Run a comparative analysis between investments of sovereign wealth funds (SWFs) and mutual funds, focusing on firm-level, country-level, and institutional…

Abstract

Purpose – Run a comparative analysis between investments of sovereign wealth funds (SWFs) and mutual funds, focusing on firm-level, country-level, and institutional variables.

Methodology/approach – We use a hand-collected sample of 1,845 acquisitions around the world over the last 25 years (251 for SWFs and 1,594 for mutual funds). We then run univariate parametric and nonparametric tests to assess the differences in the investments of both subsamples.

Findings – We review the literature on the determinants of SWFs' investment decisions. Our analysis adds to the scarce available literature on the investment decisions of SWFs and their comparison with other institutional investors. Our results show that, compared to mutual funds, SWFs indeed exhibit different preferences: for instance, SWFs prefer to acquire stakes in larger, less liquid companies which are financially distressed but which also have a higher level of growth opportunities. They also prefer less innovative firms with more concentrated ownership, which are located in less developed but geographically closer countries with whom they do not necessarily share cultural and religious backgrounds.

Social implications – Our results are important for practitioners and firms seeking to attract a given type of institutional investment. They also add insights to the debate on the “hidden” political objectives behind SWF investments in the Western world.

Originality/value of paper – This is the first attempt to empirically assess the differences in the investment choices of SWFs and mutual funds.

Details

Institutional Investors in Global Capital Markets
Type: Book
ISBN: 978-1-78052-243-2

Keywords

Book part
Publication date: 3 October 2007

Matthew Haigh

Despite speculation from legislators and practitioners, no studies have investigated the reasons for social funds’ marginal market penetration. More generally, calls for a greater…

Abstract

Despite speculation from legislators and practitioners, no studies have investigated the reasons for social funds’ marginal market penetration. More generally, calls for a greater understanding of investors’ motivations, needs and purchasing intentions have not been met. By identifying what attracts consumers to social mutual funds and the information-processing difficulties consumers face when considering a purchase, this paper claims to make a meaningful contribution to the literature on social investment and mutual funds. In 2004 an Internet questionnaire survey attracted 382 interested, current and former social investors from Australasia, North America and Europe. The questionnaire measured motivations to invest in social funds and attitudes towards information sources and selection criteria. A restricted data set was used to test a set of propositions relating to respondents’ investment intentions and information asymmetries. Results were largely as expected. Respondents were attracted to social funds from moral conviction and from desires to influence corporate behavior. One in two respondents had chosen not to invest on the basis of informational concerns. Unexpectedly, social investment styles, portfolio listings and perceived accuracy of information were considered more important to an investment decision than management expenses. Findings underline a need for careful product design and management.

Details

Envisioning a New Accountability
Type: Book
ISBN: 978-0-7623-1462-1

Book part
Publication date: 27 September 2011

Rolando Avendaño and Javier Santiso

Purpose – To study the allocation in equity markets of sovereign wealth funds’ (SWF) investments with respect to other institutional investors. To analyze the role of political…

Abstract

Purpose – To study the allocation in equity markets of sovereign wealth funds’ (SWF) investments with respect to other institutional investors. To analyze the role of political regimes in the sending and recipient countries as a determinant of the allocation of SWF investments.

Methodology/approach – We use mutual fundsinvestments as a benchmark for SWF investment allocations. We collect data of SWF and mutual fund equity investments at the firm level and analyse them on a geographical and sector basis. We compare target investments for these two groups by looking at the political regime in the sending and recipient country, using different political indicators (Polity IV, Bertelsmann). We provide a comparison of SWFs and pension funds based on governance features related to investment.

Findings – We find that the fear that sovereigns with political motivations use their financial power to secure large stakes in OECD countries is not confirmed by the data. SWF investment decisions do not differ greatly from those of other wealth managers. Although there can be differences in the allocation, political regimes in the recipient countries do not play a role in explaining the allocation of sovereign wealth funds.

Social implications – Investment from public institutions, such as sovereign wealth funds, can have significant implications at the economic and social level. Sovereign funds are potential sources of capital for emerging economies, and therefore can enchance economic growth. It is important to understand to what extent public institutional investors behave differently from private investors. The “political bias” is not a relevant factor for sovereign funds, or for other institutional investors, for allocating their capital. More often than not, their asset allocation strategies converge with other large investors, these being driven by financial and not political bias.

Originality/value of the chapter – The chapter is an original contribution providing a firm-level analysis of equity holdings for two groups of institutional investors. Moreover, it emphasizes the political dimension of institutional investments, highlighting the priorities and constraints of public investors participating in financial markets. The chapter suggests that SWFs do not discriminate by the political regime of the recipient country in their asset allocation.

Details

Institutional Investors in Global Capital Markets
Type: Book
ISBN: 978-1-78052-243-2

Keywords

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