The Markets May 1, 2013

Another Argument for Smaller Investment Menus

A new study offers another argument for providing plan participants with a shorter menu of investment options.
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Rather than noting the confusion investors can experience when offered a wide array of investment options, the study, authored by researchers at the University of Toronto’s Rotman School of Management and the Bank of Canada, suggests a shorter menu of options is often better than a longer one because “menu-setters” who develop shorter lists have superior selection skills, on average.   

“Skilled menu-setters will put together a shorter menu because they will hit on the most important features, but less-skilled menu-setters, knowing that they’re less skilled, will put together a longer menu, just to cover all of their bases,” says David Goldreich, a  finance professor at the Rotman School who co-wrote the study with Hanna Halaburda of the Bank of Canada.  

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Using mathematical models and analysis of U.S. pension plans in 2007 from 300 organizations, they found that shorter lists of available investment options proved to be of higher quality than longer ones. The researchers used a commonly-used measurement called the Sharpe ratio to evaluate the quality of the investment choices available to the organizations’ employees.  

The study will be published in a forthcoming issue of Management Science.
Deals & People May 1, 2013

Neuberger Berman Hires EMD Professionals

Investment management firm Neuberger Berman Group LLC, announced the hiring of 22 emerging markets debt (EMD) investment professionals.
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The investment staff of 12 portfolio managers, six credit analysts and four economists and strategists will operate from offices in the United States, Europe and Asia, providing regional expertise and around-the-clock market coverage. Nineteen of these new hires previously worked at ING Investment Management, where they managed more than $16 billion in EMD assets.

Neuberger Berman’s emerging markets debt platform will be led by Rob Drijkoningen, based in The Hague, and Gorky Urquieta, based in Atlanta, with 23 and 19 years of industry experience, respectively. Among others joining the firm are five lead portfolio managers: Bart van der Made (The Hague), hard currency; Raoul Luttik (The Hague), local currency; Jennifer Gorgoll (Atlanta) and Nish Popat (The Hague), corporate bonds; and Prashant Singh (Singapore), Asia local bond portfolios. The portfolio managers have an average of 16 years of industry experience.

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“These experienced portfolio managers have a long and successful history of delivering performance for clients,” said George Walker, CEO of Neuberger Berman. “We are excited that world-class investment professionals continue to choose Neuberger Berman and we look forward to partnering with clients in emerging markets debt.”

The emerging markets debt total market size is estimated by Neuberger Berman to be $11 trillion, with $3 trillion as investable bonds.

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