Perspectives
The “2 and 20″ Fee Structure
Not satisfied with traditional management fees of 0.2 to 1 percent, the Street has engaged in all manner of financial engineering, creating an array of “new” investment vehicles packaged under various names. These vehicles promise great returns, which allow them to charge a 2 percent management fee and a 20 percent carry fee. While this [...]
Read more >The Future Ain’t What It Used to Be
When Yogi Berra famously declared that “the future ain’t what it used to be,” he proved himself to be oddly prescient. In a similar vein, he easily could have been describing the European debt crisis when he cautioned that “it ain’t over until it’s over.” As PIMCO’s Bill Gross reminds us in his year-end Investment [...]
Read more >Fiscal Consolidation
As governments fought the Great Recession of 2007-09 with massive spending and bail-outs, the public debts of advanced economies increased from 70 percent of GDP in 2007 to 100 percent – its highest level in 50 years. Since debt levels above 90 percent of GDP eventually lead to crises[1], debt reduction and fiscal consolidation (FC), [...]
Read more >The Case for Emerging Market Debt
Most of us realize that over the last decade the roles of advanced economies (AEs) and emerging markets (EMs) have been reversed, but few of us have changed the structure of our portfolios to reflect this reversal. In the past, foreign-currency debt constituted a large part of the external liabilities of EMs. Today, however, foreign [...]
Read more >World Economic Outlook
In the June update of its Economic Outlook, the IMF confirms the slowdown in the world’s economies, from 5.1% growth in 2010 to 4.3% in 2011. Developing Countries, with 6.6% growth, continued to outpace the 2.2% growth of Advanced Economies. This slowdown is occurring in all regions except Sub-Sahara Africa where growth is expected to [...]
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