Investure Llc and Smith College

In: Business and Management

Submitted By curdas
Words 3129
Pages 13
Case 5: Research Affiliates
International Portfolio Management

31.03.2014

Executive Summary
Tower Watson, an investment consultant company, has for main objective toward its pension clients to increase their return as high as possible while keeping as low as possible the risk taken by their investments. We are asked to analyze the pertinence for TW to recommend to its clients the Research Affiliate Financial Index (RAFI) strategy over traditional indexing and over a more actively managed strategy. The RAFI is presented to Tower Watson as a new efficient B2B tool to invest, to help investment advisory firms to better establish their strategy. Indeed this index is based on fundamental criteria instead of market capitalization criteria (and thus it has an economic-centric view instead of a market-centric view). It has been proved through studies that portfolio weights decided by fundamentals are more reliable than by price. This interesting strategy, halfway between active and passive, has shown some significant higher returns over the past years, a fact that many pension funds have already noticed since the trend today for these funds is to invest more and more in passively traded funds. Even if such strategies seem to increase the investment exposure to market fluctuation they can still be considered as “smart-beta” strategies. In the end we will have understood that TW should follow that investment tendency and purchase RAFI’s license to offer a better performing investment strategy to its pension clients, keeping in mind that one should not invest all its AUM on a passive strategy but should rather diversify its portfolio between active and passive investment strategies.

2

Case Study Questions
1. What is the role of pension fund consultants such as Towers Watson (TW) towards their clients? What criteria should TW use to assess the suitability of…...

Similar Documents

John Smith

...It was a pleasure to meet with you last week. This memo is in regard to your concerns that you mentioned during our meeting and my recommendation for each one. Please review this memo and call me if you have any questions. 1) John Smith tax issues: a. How is the $300,000 treated for Purposes of Federal Tax income? Gross income means” all income from whatever source derived, including (but not limited to the following items: Compensation for services, including fees, commissions, fringe benefits, and similar items…..” (http://www.taxalmanac.org/index.php/Internal_Revenue_Code:Sec._61._Gross_income_define d#Location_in_Internal_Revenue_Code) According to IRC Publication 3402 Taxation of Limited Liability Companies “an individual owner of a single-member LLC classified as a disregarded entity is not an employee of the LLC. Instead, the owner is subject to tax on the net earnings from self-employment of the LLC which is treated in the same manner as a sole-proprietorship.” (http://www.irs.gov/publications/p3402/ar02.html#en_US_publink1000205890). The $300,000 is his active income. It is subject to self-employment income tax. Also, based on the cash method accounting sole proprietorship, your fee/ compensation will be taxed when you receive it. b. How is the $25,000 treated for purpose of Federal tax income? According to IRC Sec.104 (a) (2) “Any winnings in a personal injury lawsuit that covers the treatment of physical injuries are not taxable except for attorney fees which are......

Words: 1528 - Pages: 7

Adam Smith

...Adam Smith was born to Margaret Douglas in Scotland during the year 1723. Interestingly enough, his father was also named Adam Smith, but died two months before the birth of his son. His father’s occupation was as a lawyer. A strange fact about Adam Smith is that his exact date of birth was never recorded. It is known, however, that Smith was baptized on the 5th of June 1723 (Buchan, 2006). Very few happenings of Adam Smith’s childhood have been documented, but a biographer of Smith’s noted one story. It was written that when Adam Smith was only four years old gypsies abducted him (Rae, 1895). Thankfully, Smith was safely returned to his family where he was allowed to grow into a great philosopher and economist. Growing up, Smith was very close to his mother and was encouraged to follow scholarly aspirations. In Scotland, he attended one of the nicest secondary schools before entering the University of Glasgow at age 14. While at Glasgow Smith studied moral philosophy and developed his thinking in a way that resulted in his reasoning later in life. He later moved on to study political science at Balliol College, Oxford. Smith actually believed that the teaching at Glasgow was superior to that at Oxford, because Oxford was found to be intellectually stifling (Bussing-Burks, 2003). Smith left Oxford to return home and eventually he wound up giving lectures at Edinburgh in Scotland. Once established back in his native Scotland, Smith earned a spot at Glasgow University as a......

Words: 1923 - Pages: 8

Adam Smith

...Introduction Known as one of the founding fathers of economics, Adam Smith is one of the most influential writers of his time. His works seem to be able to transcend time and cultures to the extent that his books are still in circulation today and are heavily debated. From his first famous work “Theory of Moral Sentiments” to “An Inquiry into the Nature and Causes of the Wealth of Nations” Adam Smith showed that he was a leading mind in the field of political economy and for that matter human nature. He is able to explain a variety of economic influences based on his overlying concept of rational self-interest in a free-market economy. But just like any other great mind revered in history they all have to start somewhere, and his was in Scotland. Adam Smith was born and raised in Scotland in the year 1723. At the age of 14 years old he was admitted into the University of Glasgow on a scholarship. He studied moral philosophy there until he switched colleges and then attended Balliol College at Oxford. He graduated with an extensive knowledge of European literature and moral philosophy. Preceding his graduation from Oxford University he returned to his home country to give a series of lectures that contributed to him being elected as the first chair of logic in 1751 and subsequently the chair of moral philosophy in 1752 at Glasgow University. A few years later Adam Smith published “Theory of Moral Sentiments” which was well received by the general public and......

Words: 3566 - Pages: 15

Adam Smith

...Adam Smith: A Scottish philosopher and economist, who was born in 1723. In his early years he studied philosophy in a university. In this university he learned the Greek. He was greatly influenced by a philosophy teacher named Francis. He graduated at seventeen with a scholarship that facilitated him to continue studying in Oxford University's Balliol College. Adam was a reserved individual and had the opportunity to meet with influential people along his life. He also enjoyed reading books in his free time and learn many things. He became the first political economist the world had known. He later became a professor of Logic; his students loved him and his work. As of today in the U.S economy Adam Smith would be deeply troubled about financial sectors and consolidation. He differed in many ways from an economist nowadays. At those times he didn’t earn a PhD because it didn’t exist. He wasn’t a trained economist either but he studied and had what it took him to become who he now is. Adam Smith would be happy to see the livings standards that we are living today.  The rapid industrialization in many parts of the world would also be important for him since years ago workers would work many hours a day and earning way less than they deserved.  In those years the working conditions weren’t as they are now.  The places were industrial workers were unsafe and had few protections that put their lives at risk. He believed in a system that encourages individuals to......

Words: 261 - Pages: 2

Will Smith

...Will Smith I. Induction A. Willard Smith Jr. has dominated music, television, movies, nearly went bankrupt and is in the Guinness Book of World Records B. Lets learn more about Will Smith by first background, secondly music and finally movies and television. (To begin, we’ll look at his background) II. Background A. He was born in West Philadelphia. 1. Mother, Caroline 2. Father, Willard Smith Sr. 3. Brother, Harry Smith B. He married Shree Zampino in 1992. 1. Son, Willard Smith III 2. Divorced in 1995 C. Smith married Jada Pinkett in 1997 1. Son, Jaden 2. Daughter, Willow According to the Magazine titled “Will Smith changing the World” Will Smith has given $2.5 million to charities of which went to two Christian ministries and other Christian school in 2007. (Next, let’s focus on music) III. Music A. Smith started a hip hop duo with DJ Jazzy Jeff. 1. Known for humorous radio-friendly music 2. Parents just don’t understand 3. Summertime B. They won their first Grammy in Rap in 1988. 1. Underpaid his income tax 2. IRS wanted $2.8 million According to PEOPLE.com Will Smith has entered the studio with La Mar Edwards who’s worked with other popular rappers, to release a new album. (Finally, we will learn about Television and Movie) IV. Television and Movie A. He nearly went bankrupt in 1990 1. Fresh Prince of Bel-Air 2. Independence Day 3. Men in Black According to Wikipedia Will Smith had......

Words: 380 - Pages: 2

Smith

...Market Needs In 2009 approximately 870,000 full-time students were attending Canadian universities. The highest percentage increase of enrollment for undergraduates was in British Columbia (6.4%) and the highest percentage increase of enrollment for graduate students was in Prince Edward Island (38.1%) (AUCC.) With so many students, Altadena Computers has a large base to target and market their special brand of customized laptops. Because of to the economic downturn the prediction in Canada reflects more people returning to college to increase their job marketability. In 2009, an increase of 4.1% in undergraduate programs and an increase of 7.2% in graduate programs validate the predictions. Altadena aims to provide quality merchandise that lasts longer than a few years, replacing the laptop will not be a concern for the student. Altadena employees rely on the students to guide them in designing the perfect laptop. Channel Strategy Market Potential Below is data collected by World Bank of Internet user percentages for United Kingdom and Canada. The trend of Internet use has significantly increased, doubling in the past decade. In 1990, domestic and international Internet usage was merely nonexistent and has steadily progressed past the year 2000. In 2007, Canada’s Internet usage inclined to 72.8% while the United Kingdom ascended at 71.7% and is steadily increasing into 2008. {draw:frame} Case # 1 – Domestic Location – Canada In 2007 Canada’s population...

Words: 269 - Pages: 2

Crayola Llc

...[pic] Crayola LLC 1100 Church Lane Easton, PA 18044-0431 Phone: (610) 253-6271 Fax: (610) 250-5768 www.crayola.com Parent Company Crayola became a wholly-owned subsidiary of Hallmark Cards, Inc. in 1984. Subsidiaries Crayola’s subsidiaries include Portfolio Series and Silly Putty. Binney and Smith acquired the rights to Silly Putty in 1977. Mission Statement Crayola does not have a formal mission statement. This is probably due to the fact that they are a subsidiary of Hallmark Cards, Inc. If they were to ever formalize a mission statement it should be the following: “The business we're in: The best quality, safest products for colorful visual expression for enjoyment, learning and work.” Core competency Crayola’s core competencies, taken from the vision section the website, include: Obsessed with Consumer Needs: Be passionate about meeting consumer needs. Constantly ask: What are the implications for the consumer? Take the initiative to learn about our consumers and competitors. Make decisions based on insights about the consumer. Proudly represent our brands when talking to others. Remind each other about the importance of the consumer. Biased for Action: Be impatient and unsatisfied with the status quo. Move faster internally than the external world. Develop and implement impactful solutions. Exploit ideas and opportunities quickly. Take ownership and accountability for action and results. Act, learn, and make changes as......

Words: 1516 - Pages: 7

Marketing Analysis for Crayola Llc

...Marketing Analysis: Crayola LLC Company’s Corporate Name The corporate name is Crayola LLC. On January 1, 2007, the “Binney & Smith” name was retired and they started using the name Crayola LLC, since it was the company’s well-known brand. Crayola is a brand of artists’ supplies that is best known for its crayons. Crayola LLC claims the Crayola brand has a 99% name recognition in the U.S. household, which is why the name Crayola LLC is used in place of Binney & Smith. Crayola began as Binney & Smith in 1885 when Joseph Binney partnered with his son and nephew. Binney & Smith began producing dustless chalk and then later began producing crayons and color pencils. The company has experienced tremendous growth from this timeframe to become the largest art supply company in the world. The company is currently in the maturity phase of the product life cycle and successfully avoids the decline phase by continually introducing innovative products. Since most parents are concerned with the mess that is associated with arts and crafts, Crayola has moved from crayons to toys to address this concern. They reinvented themselves by creating toys that are relatively cheap and are mess-free. The toys also do not require adult supervision. Since Crayola is not a toy maker, this creates a whole new stage of development. Crayola’s Corporate Headquarters 1100 Church Lane Easton, PA 18044-0431 Phone: (610) 253-6271 Fax: (610) 250-5768 Parent Company Crayola...

Words: 1915 - Pages: 8

Adam Smith

...ANALYTICAL ESSAY 1: How Adam Smith Has Shaped Our Economy For The Better Jose Arguello University of Redlands July 25, 2013 Introduction The purpose of this paper is to analyze and discuss how Adam Smith’s economic theories have shaped our economy for the better. This paper will define Adam Smith’s major economic theories and relate them to today’s economy. This paper will conclude with recommendations on how some of these theories can be improved. Discussion When people think of Adam Smith they think of Adam Smith “the economist.” In fact, many don’t realize that Adam Smith was a philosopher at heart. From that critical thinking space as a philosopher, Adam Smith developed his economic theories. Adam Smith obtained a professorship at Glasgow teaching moral philosophy. “Here, Smith developed his passion for liberty, reason, and free speech. In 1740 Smith was awarded the Snell exhibition and left to attend Balliol College, Oxford.” (Buchanan, 2006) These are important facts about Adam Smith because it gives us an insight to his philosophy and eventually into his economic theories. Furthermore, before Adam Smith wrote his well-known work, The Wealth of Nations, he wrote The Theory of Moral Sentiments. It is important to note that in writing The Theory of Moral Sentiment, Adam Smith’s goal “was to explain the source of mankind's ability to form moral judgments, in spite of man's natural inclinations towards self-interest. Smith proposes a theory of......

Words: 2699 - Pages: 11

Will Smith

...WILL SMITH THE MAN, THE ACTOR, THE ARTIST, THE LEGEND. Will Smith, a name synonymous with greatness and immortality. A name comparable to such greats as Isaac Newton, Abraham Lincoln, and Superman. A man who seemingly has conquered every aspect of the entertainment industry as we know it. With multiple musical hits spanning several decades, an iconic hugely popular sitcom, and with countless blockbusters, Will Smith is part of an elite group of people who have been able to enjoy success in the three major entertainment categories within the United States. Not since the discovery of fire has the world been so captivated, not since the invention of the wheel has the world seen such success, and not since the days of the bible has the world experienced such perfection. “…Jesus has gone away to heaven, and some day, just as He went, He will return!” (Acts 1:10-11, TLB). These words insight hope, hope that maybe after 2000 years the savior has finally returned in the form of a fine piece of chocolate, better known as Will Smith. If not the messiah, it is safe to conclude that God had created Will for a much more important reason than is even possible to conceive by any living being. His rise to fame, compelling, his music, timeless, his movies, groundbreaking, and his life, nothing short of amazing. Follow as you are taken from West Philadelphia all the way to the very pinnacle of stardom. In West Philadelphia born and raised, on the playground is where he spent most of his......

Words: 2108 - Pages: 9

Llc Info

...The correct structure of a company can have many implications and is important to its long term organization, growth and ownership. Given the concerns regarding liability, taxation and ability to raise capital of the current business structure, the company should retitle itself to be considered an LLC. Under the current classification of Sole proprietorship, the owner is held fully liable for all business obligations, receives no additional tax benefits and cannot bring in partners/shareholder as a means to raise capital. The business will also cease to exist once the owner is no longer operating the company. An LLC structure, as well as S-corp and C-corp, would generally shelter both the members and shareholders from the liabilities incurred by the business. The advantage of an LLC over an S-corp or a C-corp is that it would be much easier to setup, maintain, and control with the current owner structuring the company as they see fit. Given the minimal amount of intended investors of the company, it does not appear that buying and selling of company stock is a main concern. The new structure should have the ability to do this as needed, but other concerns take precedence over this. It is for this reason that a C-corp should not be considered due to the high regulations, increased administrative requirements, and double taxation that will occur. An S-corp also carries the strict record keeping requirements of a C-Corp but eliminates the possibility for......

Words: 452 - Pages: 2

S-Corporation vs Llc

...to my understanding that Mr. John Smith will be the source of capital in this joint business venture. Mr. Smith, a retired man, is concerned with protection from liability for the sake of his personal assets and belongings. Taxes are not a concern as long as they are paid and protection keeps him behind some form of veil. On the other end of the spectrum, we have the younger Mr. Juan Gonzalez. Mr. Gonzalez does not have much in the way of investments nor does he have any personal assets that would be much at risk. Mr. Gonzalez is more concerned about taxes and with obtaining as much profit as possible with no minimal attention to risk, understandably so. It’s best to take these drastic views and ideologies and reach some semblance of a compromise between both parties in terms of which business entity should be agreed upon. To commence, it would be best to eliminate superfluous options from the get go. Sole proprietorship is out of the question simply because of its inherent definition. A “partnership” will also not be considered, because although it offers several tax breaks and the potential to be more easily managed, it has an unlimited amount of liability risk. If for any reason there were ever a dispute and the business were to be sued, the pursuer of the suit will be able to directly aim for the personal assets of the business owners, not just the business. This ever looming cloud would be an unnecessary burden that both Mr. Smith and Mr. Gonzalez would not want......

Words: 1900 - Pages: 8

Smith

...Smith Chart 0.12 0.11 0.1 0.13 0.37 0.14 0.36 80 1.2 40 0.15 0.35 0.39 100 50 0.38 45 9 0.0 8 0.0 0.4 1 0.4 110 90 1.0 0.9 70 0.1 6 0.3 4 60 1.6 0.6 60 2 0.4 120 0.7 1.4 35 0.0 7 3 0.4 0 13 70 0.0 (+ jX /Z R ,O o) E NC TA EP SC SU VE TI CI PA CA ) /Yo (+jB 0.3 0.1 7 3 55 0.8 30 1.8 2.0 0.5 65 0.2 50 0.3 0.1 2 8 19 0. 0. 06 44 25 31 0. 0. 14 0.4 0 40 0.4 RE AC TA 75 NC EC OM PO N EN T 0.0 4 15 0 6 0.4 0.0 —> WAVELE 0.49 NGTH S TOW ARD 0.0 D WA 160 10 7 5 1.1 0.2 1.3 1.2 0.4 1.4 0.9 1.3 1.4 0.6 4 1.3 1.4 0.8 1 0.8 1.5 1.5 1.6 3 1.8 1.5 0.7 1.6 2 2 0.6 WAVELE 0.49 NGTH S TOW ARD 0 0.49 GEN LOAD E 0.47 AV 160 — W 160 < -90 90 - 4.0 80 0.8 0.8 1.0 1.0 1.0 IND UCT IVE 85 10 20 0.2 0.2 50 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.2 1.4 1.6 1.8 2.0 3.0 4.0 5.0 10 20 50 RESISTANCE COMPONENT (R/Zo), OR CONDUCTANCE COMPONENT (G/Yo) 0.2 0.2 0.1 10 0.4 0.6 0.4 o) jB Y 0.48 0.6 (CE AN PT CE S SU -85 1.0 4 0.0 0 -15 -80 E IV CT DU IN 0.4 0.3 0.3 6 -75 R ,O o) /Z 5 0.0 5 0.4 6 -70 0 0. -65 0.6 -60 1.6 0.7 1.4 0.8 0.9 1.2 -55 1.0 0 -5 5 -4 RADIALLY SCALED PARAMETERS ∞ 100 40 ∞ 40 30 0 1 1 0.9 1 0...

Words: 551 - Pages: 3

Investure, Llc, and Smith College

...UVA-F-1537 INVESTURE, LLC, AND SMITH COLLEGE In January 2004, Alice Handy’s new investment advisory firm, Investure, LLC, was attempting to land its first client, Smith College, an elite liberal arts college located in Northampton, Massachusetts with a $913 million endowment. Handy, fresh from her previous position as chief executive officer of the University of Virginia Investment Management Company (UVIMCO), had 25 years of experience managing money and a track record of success. Over her career, Handy had directed increasing amounts of funds to a class of investments known as “alternative assets,” which included a range of investments other than publicly traded stocks and bonds. She had also developed a philosophy about their use and principles that she hoped would guide her new company to success. Mindful that in the investment world “past returns were no guarantee of future returns,” Handy knew she would face challenges from the unprecedented flow of funds into alternative assets and competition from other advisors. Building a business would also require time, energy, and persistence. All of these concerns, however, were in the back of her mind. In the forefront was Smith College’s endowment. She and her partner, Bruce Miller, were eager to review Smith’s current portfolio and prepare asset allocations that would position the endowment for future success. Handy’s Career Handy began her career at Travelers Insurance in 1970 after receiving a......

Words: 6088 - Pages: 25

Adam Smith

...“Adam Smith Meets Climate Change How the theory of moral sentiments could be applied to cap-and-trade greenhouse-gas emissions.” By Ian Ayres and Doug Kysar Slate, Posted Thursday, Sept. 25, 2008, at 11:53 AM ET Despite all the attention to domestic oil drilling, Obama and McCain are not that far apart on climate change—both candidates support a cap-and-trade system to limit U.S. greenhouse-gas emissions. And neither candidate has told us much about how they will get the rest of the world on the cap-and-trade bandwagon. That challenge deserves more focus—unless we can entice fast-growing emitters like China, India, and Brazil ! into a climate change treaty as full participants, even complete energ y independence in this country will be little consolation in a warming world. We think Adam Smith may have had a suggestion for how to think about this problem—and it's more than just an invisible hand. For 30 years now, officials have been groping toward a system in which greenhouse-gas emitters all around the world can trade permits. GHG reductions achieve the same global atmospheric benefit regardless of where they occur, but because industries and firms have different costs of reduction, it makes economic sense to allow them to trade permits. That way we can lower emissions for less money. But a crucial sticking point is figuring out how to initially allocate emissions permits among the various countries of the world. [PROPOSAL ONE:] Generally speaking, richer......

Words: 1307 - Pages: 6