Ranking Smart Betas

Ranking Smart Betas

By John Rekenthaler | 10-03-13 | 11:00 AM | Email Article

Is There a Risk Factor?
Michael Edesess has done what few have dared: He has trashed Dimensional Fund Advisors. As evidenced by the title of his book, The Big Investment Lie, Edesess enjoys poking objects with a sharp stick. However, it’s one thing to jab at hedge funds, a rose that long ago lost its bloom. It’s quite another to take on DFA, which has never been more popular, either in reputation or in sales. And take on he does. In the provocatively titled article, “Why DFA’s New Research is Flawed,” which appears in the publication Advisor Perspectives, Edesess accuses DFA of practicing quackery. The company might appear to follow only the most rigorous scientific principles, writes Edesess, as befits its stable of PhDs, its connection with The University of Chicago, and its citations of Gene Fama and Ken French, but in reality it conducts “spurious pseudo-mathematical” analysis that leads to “poorly constructed and poorly presented nonsense.” The company, states Edesess, “has succumbed to a dreadful descent into scientism.” Read more of this post

The fiasco of the troubled Tongyang Group is unfolding in an uglier way as the chairman’s family is accused of making selfish, immoral decisions when the collapse of the mid-tier conglomerate is harming tens of thousands of innocent people

2013-10-07 17:17

Tongyang owners under investigation

Moral hazard angers investors
By Kim Tae-jong

The fiasco of the troubled Tongyang Group is unfolding in an uglier way as the chairman’s family is accused of making selfish, immoral decisions when the collapse of the mid-tier conglomerate is harming tens of thousands of innocent people. The group chairman’s wife and vice-chairwoman Lee Hye-gyeong is under criticism because she is suspected of taking out gold bars worth billions of won from the head office of Tongyang Securities in Eulji-ro, downtown Seoul. Read more of this post

Chaebol’s expansion: Three major conglomerates ― Woongjin, STX and Tongyang ― went belly-up this year because of their headlong expansion into diverse fields of business.

2013-10-07 17:22

Chaebol’s expansion

Three major conglomerates ― Woongjin, STX and Tongyang ― went belly-up this year. There are several reasons for this, but one is most certainly because of their headlong expansion into diverse fields of business. A recent report on chaebol subsidiaries once again illustrates the seriousness of this deep-seated problem in our corporate world, raising the need for the government to act resolutely in order to prevent the recurrence of another currency crisis. Read more of this post

An insider trading scandal implicating major shareholders of Genome International Biomedical Co. (GIBC) has highlighted problems with backdoor listing

GIBC scandal shows backdoor listing issue: analysts

The China Post news staff
October 7, 2013, 12:06 am TWN

TAIPEI, Taiwan — An insider trading scandal implicating major shareholders of Genome International Biomedical Co. (GIBC) has highlighted problems with backdoor listing, market observers said yesterday. GIBC’s share price has plunged below NT$70 from its highest of NT$212 recorded earlier this year when its subsidiary, Top Pot Bakery chain, was still a fast-expanding business before being embroiled in a false advertising scandal. GIBC’s current stock price is still substantially higher than that of the shell that the biomedical firm took over for backdoor listing purposes a few years ago. Read more of this post

TSMC in top 100 global innovators, marking a milestone for both the company and Taiwan’s business world

TSMC in top 100 global innovators: Reuters

By Kathryn Chiu ,The China Post
October 8, 2013, 12:08 am TWN

TAIPEI, Taiwan — Taiwan Semiconductor Manufacturing Company (TSMC) was named as one of the world’s top 100 most innovative organizations for 2013 in a survey released by Thomson Reuters, marking a milestone for both the company and Taiwan’s business world. The IP & Science division of Thomson Reuters, provider of information for businesses and professionals, announced its 2013 Top 100 Global Innovators list, which included a Taiwanese company for the first time since its initial publication in 2011. Read more of this post

FX Concepts, once the world’s largest currency hedge fund, closing funds, firing employees as losses mount; AUM shrunk from $12bn in 2009 to $661m

FX Concepts Closing Funds, Firing Employees as Losses Mount

FX Concepts LLC, the currency hedge fund founded by John Taylor that was once the world’s largest, is closing funds and shedding employees as losses for the company’s main trading program approach 15 percent this year. The hedge fund’s assets under management shrunk to $661 million as of Sept. 26, from about $12 billion in 2009, according to data from the New York-based company’s investor website. The San Francisco Employees’ Retirement System voted on Sept. 11 to pull the more than $450 million it had invested with FX Concepts, according to CNBC. Alison Johnson, a spokeswoman for the San Francisco pension fund, didn’t immediately return a call seeking comment. Read more of this post

Singapore’s Blumont, Asiasons Shares Plunge; Sentiment for small-cap stocks hit; Ossia International, Asia-Pacific Strategic Investments queried by SGX over “substantial” share price falls

October 6, 2013, 10:42 p.m. ET

Blumont, Asiasons Shares Plunge

Companies Lose More Than 85% of Respective Share Values After Trading Resumes

CHUN HAN WONG And JAKE MAXWELL WATTS

SINGAPORE—Blumont Group Ltd. A33.SG -75.57% and Asiasons Capital Ltd.5ET.SG -74.04% lost more than 85% of their respective share values on early Monday, after the Singapore Exchange S68.SG +0.28% lifted trading suspensions on both stocks and applied stricter trading rules to them. Blumont’s share price dropped by as much as 85% to 12.8 Singapore cents (10 U.S. cents), down from S$0.880—its last traded price before its suspension on Friday. Shares of Asiasons lost as much as 90% of their value, falling to 10 Singapore cents, compared with the S$1.04 last traded price on Friday before the suspension. Read more of this post

Number of chaebol’s affiliates soar 50% in five years, raising chances of liquidity problems; Many are acquisitions, but analysts warn of over-reliance on debt

2013-10-06 16:49

Number of chaebol’s affiliates soar 50% in five years

By Choi Kyong-ae

Conglomerates are expanding their business territories fast here by setting up new affiliates and acquiring smaller firms, raising chances of liquidity problems, economists said Sunday.  The response comes after Chaebul.com, a local chaebol research company, said Korea’s top 30 companies increased the number of their affiliates by 48 percent over the past five years through 2012 to 1,246 from 843 at the end of 2007. Read more of this post

Philippines fastfood giant Jollibee going to Indonesia, Canada

Jollibee going to Indonesia, Canada

By Neil Jerome C. Morales (The Philippine Star) | Updated October 7, 2013 – 12:00am

MANILA, Philippines – Fastfood giant Jollibee Foods Corp. (JFC) is expanding into new territories including Indonesia next year and Canada in 2015, catering to both the local population and Filipinos overseas. Tapping new markets is in line with the company’s goal of becoming Asia’s largest homegrown quick service restaurant chain, an executive said. “We just opened in Houston, Texas. Our next target is to open in Chicago and near future Toronto, Canada. It will be our first in Canada,” JFC chief operating officer Ernesto Tanmantiong said in an interview. Read more of this post

How to Look Under a Hedge Fund’s Hood: Seven questions investors should ask before investing

October 3, 2013, 10:42 a.m. ET

How to Look Under a Hedge Fund’s Hood

Seven questions investors should ask before investing

JULIE STEINBERG

Now that hedge funds are allowed to advertise their wares in the marketplace, it will be important for investors to understand this sophisticated asset. If you meet the income or asset minimums required to invest, hedge funds can be a good way to diversify your portfolio and achieve impressive risk-adjusted rates of return. But hedge funds may require high minimum investments and can lock up your money for months. Because of the funds’ private nature, there is also increased potential of fraud. Before giving the green light to your financial adviser or handing your money directly to a hedge-fund manager, here are seven key questions to ask: Read more of this post

Singapore’s Blumont Group slumps 80 percent after trading halt lifted; Asiasons Capital tumbles, requests trading halt continue

Blumont Group slumps 80 percent after trading halt lifted

Monday, Oct 07, 2013, Reuters

SINGAPORE – Shares in Blumont Group Ltd fell 80 per cent in early trade to around S$0.18 after trading resumed following a halt imposed by Singapore Exchange on Friday. Singapore Exchange Ltd halted trading in Blumont, along with Asiasons Capital Ltd and LionGold Corp after their stock prices plunged. The bourse said on Sunday it would allow trading in those stocks to resume, subject to restrictions that included a ban on short selling. LionGold has requested its trading halt continue due to a pending announcement.

Asiasons Capital tumbles, requests trading halt continue

Monday, Oct 07, 2013, Reuters

SINGAPORE – The share price of Singapore-listed Asiasons Capital Ltd dropped as much as 90 percent to S$0.17  after a  trading halt was lifted on Monday. Singapore Exchange Ltd suspended trading in Asiasons and LionGold on Friday, along with Blumont Group Ltd after a plunge in their share prices. Blumont shares resumed trading, down 81 percent to S$0.167. Asiasons Capital Ltd requested on Monday that trading in its shares remain halted. Asiasons followed LionGold Corp in asking for trading halt due to a pending announcement. The bourse said on Sunday it would allow trading in those stocks to resume, subject to restrictions that included a ban on short selling.

Japan Exchange Group Inc. (8697) will this year announce criteria and about 500 stocks for the new index, which will be based on fundamentals; “It’s going to be a quality index, not just a quantity index, and that’s very important. “It’s going to be like a membership of the country club and many companies will want to join a special club.”

Japan’s GPIF May Opt for Growth Stocks in Bid for Returns

A state-run Japanese fund that’s the world’s biggest manager of retirement savings may boost investment in growth stocks to increase returns after record domestic bond losses this year eroded gains on its assets. The 121 trillion yen ($1.24 trillion) Government Pension Investment Fund will allocate several billion yen to a new domestic index focused on returns on equity, governance and trading volume, the Nikkei newspaper reported today. It may later boost investment to several trillion yen, Nikkei said without citing anyone. Japan Exchange Group Inc. (8697) will this year announce criteria and about 500 stocks for the new index, which will be based on fundamentals, CEO Atsushi Saito said in Tokyo on July 30. That will be a departure from benchmarks like the Topix index, which includes all stocks listed on the Tokyo Stock Exchange’s first section, or the Nikkei 225 Stock Average. “It’s going to be like a membership of the country club and many companies will want to join a special club,” Curtis Freeze, the Tokyo-based chief investment officer at Prospect Co., which manages about $330 million in Japanese equities for overseas investors, said by phone today. “It’s going to be a quality index, not just a quantity index, and that’s very important.” Read more of this post

LionGold’s preference for scrip transactions has seen many Australian investors end up with an exposure to the Singapore based company

Singapore’s LionGold suffers 40% share collapse

October 5, 2013

Peter Ker

Australian gold investors with exposure to Singapore company LionGold were on the wrong end of the company’s curious share price on Friday, when the stock suddenly fell by more than 40 per cent. LionGold, which has spent the past 18 months acquiring some of Australia’s most marginal gold assets in exchange for its own shares, was put in a trading halt by Singapore authorities out of concern that the market was not fully informed. Among the Australian assets that LionGold has acquired since taking an interest in gold 18 months ago are the fields near Ballarat that played host to the Eureka Stockade. Read more of this post

Pull closet indexing out of the closet; Fund manager practice is a tax on millions of investors

October 4, 2013 2:15 pm

Pull closet indexing out of the closet

John Authers

Fund manager practice is a tax on millions of investors

In the UK, people are trying to pull closet indexing out of the closet. It is a fight that could have global implications. This is one issue on which there is no need to sit on the fence. The debate betweenactive managers, who try to beat their benchmark, and passive managers, who merely track it, will go on and on. But everyone can agree that there is no case for closet indexing – the practice of running an “active” fund, charging active management fees but, in practice, offering an investment that merely hugs the index. Read more of this post

Tongyang Group Chairman Hyun Jae-hyun’s risky bets have led the mid-tier conglomerate to head toward a tragic end, producing innocent victims

2013-10-04 17:46

Tongyang investors to take fall

Financial regulator launches taskforce to help victims
By Kim Tae-jong

Aletter to Tongyang Group Chairman Hyun Jae-hyun was found in the car where a female employee at a Jeju branch of Tongyang Securities committed suicide on Oct. 2, feeling guilty about customers’ losses

Tongyang Group Chairman Hyun Jae-hyun’s risky bets have led the mid-tier conglomerate to head toward a tragic end, producing innocent victims.
The group’s five affiliates including Tongyang Cement & Energy and Tongyang Networks have been placed under court receivership, and its previous efforts to keep afloat through bond issuance have also harmed tens of thousands of retail investors.
Pressured by the guilt over customer losses, a female employee from a Jeju branch of Tongyang Securities took her own life on Oct. 2. The brokerage affiliate sold more than half of corporate bills and bonds issued by the group.
Identified only by her surname Ko, she was found dead in her car in an apparent suicide with a suicide note and letter to chairman Hyun found in the scene.
“Chairman Hyun, you can’t do this to your employees and customers,” she wrote in her letter to Hyun. “I recommended to customers (to buy our corporate bonds and bills) to offer them high interests. I really trusted Tongynag Group.”
She also expressed her deep regret over the financial damage caused to customers, demanding the group take measures to make full compensation for them.
The police stated she made a tragic decision, and that she suffered from complaints from customers who were subject to huge losses from their investment, after the group’s five affiliates sought court receivership. Read more of this post

Singapore Exchange Suspends Trading in Shares of Three Speculative Companies after their prices plunged dramatically

Oct 3, 2013

Singapore Exchange Suspends Trading in Shares of Three Companies

CHUN HAN WONG

SINGAPORE—Singapore Exchange Ltd. suspended trading on three companies’ shares after their prices plunged dramatically in early Friday trade, wiping out strong gains notched in recent months. In less than an hour of trading, sterilization-services provider Blumont Group Ltd. lost more than 56% of its market value, while share prices of Asiasons Capital Ltd. and LionGold Corp. Ltd. plunged by 61% and 42% respectively. Friday’s sharp drops followed weeks of substantial gains in the three companies’ share prices, which had prompted the exchange to issue official queries seeking explanations for the increases. Read more of this post

Fears spread over chaebol’s debts; Investors, creditors study balance sheets after Tongyang’s woes

Fears spread over chaebol’s debts

Investors, creditors study balance sheets after Tongyang’s woes

BY MOON GWANG-LIP [joe@joongang.co.kr]

Oct 04,2013

A group of investors in Tongyang Group bonds stages a protest near the residence of Chairman Hyun Jae-hyun yesterday afternoon after allegations arose that the company issued fraudulent commercial paper

In the wake of the sudden financial meltdown of Tongyang Group, one of Korea’s top 40 conglomerates, attention is shifting to the debt levels of other large companies. Rumors are spreading in the local financial industry that some affiliates of Dongbu Group, Hanjin Group, Hyundai Group and Kolon Group – all within the top 40 – could face the same fate as the Tongyang subsidiaries now under court receivership. Financial authorities are cautioning against overreaction from investors and creditors-? they don’t want scared creditors making things worse for companies by calling in debts. But, some market analysts say that the Tongyang crisis may serve as a wake-up call for overdue financial reforms at many conglomerates.

Read more of this post

Taiwan famous show host Dee Hsu’s father-in-law admits to insider trading charges

Dee Hsu’s father-in-law admits to insider trading charges

Friday, October 4, 2013 – 10:51

The China Post/Asia News Network

TAIPEI, Taiwan — District prosecutors yesterday said Hsu Hsun-ping (徐洵平), chairman of Genome International Biomedical Co. Ltd. (GIBC), admitted during a questioning session that he participated in insider trading. From Wednesday morning through to Thursday morning the Taipei District Prosecutors Office questioned Hsu Hsun-ping, his wife Jiang Li-fen (姜麗芬), talk show host Dee Hsu’s (徐熙娣, also known as Little S) husband Mike Hsu (許雅鈞), and her father-in-law Hsu Ching-hsiang (許慶祥) over allegations of gaining profits through insider trading. The four of them hold GIBC shares. Read more of this post

SGX suspends trading in Asiasons, Liongold and Blumont shares

SGX suspends trading in Asiasons, Liongold and Blumont shares

Friday, Oct 04, 2013

Reuters

In a dramatic move this morning, the Singapore Exchange (SGX) suspended the trading of three stocks, namely Blumont, Asiasons Capital and Liongold. SINGAPORE – The Singapore Exchange Ltd on Friday suspended trading in Asiasons Capital Ltd and Liongold Corp Ltd after their share prices fell sharply in the morning session. Asiasons shares plunged 61 per cent while Liongold Corp shares dropped 42 per cent before their trading suspension. According to statements filed by both firms, the Singapore bourse operator invoked SGX-ST Rule 8.10 to immediately suspend trading “to safeguard the interests of the market as there could be circumstances that would result in the market not being fully informed”. It also suspended the trading of Blumont Group Ltd shares after the company said it plans to take over a foreign-listed coal mining company, sending its shares plunging by more than 50 per cent. “This is to safeguard the interests of the market as there could be circumstances that would result in the market not being fully informed,” a stock exchange filing said. Blumont said before market hours on Friday that it had reached an agreement on the terms of a proposed takeover bid of a coal mining company for up to S$146 million ($117 million).

Time to Ditch the Yale Endowment Model

Time to Ditch the Yale Endowment Model

Institutional investors are different from you and me — they have a lot more money. Pension plans in rich countries manage almost $30 trillion in assets, for example. This opens doors at the offices of hedge funds, private-equity firms and other expensive money managers and creates opportunities to directly invest in projects inaccessible to regular people, such as dams, natural-gas fields and real-estate developments. But while a select few institutions can generate higher returns — for less risk — than we lowly mortals can achieve with low-cost index funds, the average fund should avoid trying to get too creative. The modern style of institutional investing can be traced to Yale University’s David Swensen, who literally wrote the book on the subject. (Full disclosure, I’m a Yale graduate.) Three core ideas inform his thinking. Read more of this post