“Are we ready to step up?”
Tracy Vegro OBE asked the above question when she joined as chief executive of the Institute in September 2022, speaking of opportunities for the CISI to expand wider society’s understanding of the benefits of financial services, boosting financial literacy and investment advice. Read about her vision, leadership style, thoughts on diversity and inclusion, and more, in our profile piece (p.24).
Shortly after Tracy spoke of the need to raise standards of knowledge, two expert contributors to The Review, Con Keating and Iain Clacher, submitted a piece analysing disruption to the UK gilt market, saying that pension schemes adopted liability-driven investment because of a “misconceived accounting standard” (cisi.org/ldi). This point is picked up by a recent House of Lords committee report, covered in our Review of Financial Markets (RoFM) section (p.67), which states that LDI is a “solution to an artificial problem created by accounting standards”. For Keating and Clacher’s detailed roundup of lessons learned, turn to page 61.
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Our special report for this edition looks at indices – why we have them, the companies behind them, and how the new generation of indices in the passive world compares to more traditional ones (p.16). It shows their staggering growth over the past decade or so, with, for example, their percentage of total share of the US funds market growing from 20% in 2011 to 43% in 2021.
Looking at a different kind of growth, our piece on pension freedoms says that, according to the Bank of England, assets in UK defined contribution (DC) schemes are expected to double from £500bn in 2021 to £1tn in 2030 (p.37), and asks if DC funds are prepared to take on greater risk for greater reward in the context of imminent regulatory change.
We also look at risks arising from weaknesses in global corporate reporting (p.34), which countries have more robust systems (Ukraine) than others (UK) and why.
Other highlights in this edition include our feature on the growth of corporate insolvencies post pandemic (p.29), guidance and case studies for those thinking of becoming an expert witness (p.41), our Grey Matters ethical dilemma about whether to accept a bonus which appears to come from a manager’s own pocket (p.46), and Andy Davis’s column about the impact of rising base rates on the global investment landscape (p.70).
As ever, please get in touch with any comments or suggestions.
Jane Playdon
Review editor, CISI
Read the March 2023 edition of The Review