Fed's 'tapering' surprise sends world shares surging + MORE Sep 19th

When companies are pushed by institutional investors to improve their governance practices and to do something about climate change, they tend to actually do something. And shareholders benefit with better operating performance by the company and stock price gains. So conclude Elroy Dimson, Oğuzhan Karakaş, and Xi Li in Active Ownership.There is now quite a lot of research showing a positive association between Corporate Social Responsibility action and better accounting performance and stock gains (see literature reviews within the paper) but Dimson et al making a convincing claim that the link is causal i.e. action can produce results. They accessed the records of a big activist institutional investor and linked specific interventions or engagements with subsequent acceptance or refusal by the target corporations and then with the accounting/stock data. Accounting measures they used included return on assets, gross profit margin, asset turnover and sales per employee.A few types of action matter most …

MoneySense magazine will be running a story on Canadians who have managed to grow their Tax-Free Savings Account (TFSA) contributions to $30,000, $40,000 or more (if you are interested in sharing your story, see details at the end of this post). The Financial Post also ran a series of stories on TFSA investors during the summer. That got me thinking: how would a passive investor who held Canadian stocks, bonds or REITs in her TFSA have fared assuming she made the maximum contribution on the first trading day of the calendar year. Also, assuming the TFSA investor is an Ontario resident, how much would she have saved in taxes?
Canadian Stocks in TFSA
If a TFSA investor had purchased iShares S&P/TSX 60 ETF (TSX: XIU) on the first trading of January for the entire TFSA contribution room plus the cash accumulated during the previous year, she would have a balance of approx. $30,000 as Sept. 18, 2013. Interestingly, all purchases except the first would have been made within a narrow trading band around the current price…

The California Public Employees’ Retirement System (CalPERS, 6th largest pension fund in the world, a lot bigger than Canada’s national CPPIB), new guiding investment beliefs, includes some thought-provoking elements:Liabilities must influence the asset structure – CalPERS has a large and growing cash requirement and inflation-sensitive liabilities; assets that generate cash and hedge inflation should be an important part of the CalPERS investment strategyCalPERS is willing to be activist, preferably by direct engagement, where it can make a material difference to portfolio return or risk (like governance especially, plus social and environmental factors that affect long-term sustainability) and where it has a chance of successStrategic asset allocation is the dominant determinant of portfolio risk and return … but Risk to CalPERS is multi-faceted and not fully captured by volatility or tracking error e.g. climate change and natural resource availability are considered long term risk factors; the path of returns mattersCosts matter and need to be effectively managed, including alignment of compensation between fund interests and those of staff or external managersThese principles would seem pertinent, partly for my own retirement investing…

World stock, bond prices surge, U.S. dollar falls after Fed stuns markets by maintaining status quo on bond-buying program

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