CFA Institute

Research Foundation

Celebrating Over 50 Years of Relevant, Practitioner-Focused Research

The CFA Institute Research Foundation is a not-for-profit organization that sponsors independent, in-depth research on current issues important to investors and investment professionals around the world.

Research Foundation content can be downloaded for free by all CFA Society New York members.

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Monographs

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Literature Reviews

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RF Briefs

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Publications

CFANY in 2015 RF Review

CFANY was featured prominently in the 2015 RF Review.

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2017 Research Foundation Award

CFANY was awarded the 2017 Research Foundation Society Award based on our robust calendar of informative and educational events. During the period, CFANY hosted the 50th anniversary celebration of the Research Foundation itself.

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Monographs

Comprehensive books, generally 100+ pages, on a particular subject

Handbook on Sustainable Investments: Background Information and Practical Examples for Institutional Asset Owners

December 2017 | READ MORE>>

A fast growing share of investors have recently widened their scope of analysis to criteria regarded as extra-financial. They are driven by different motivations. Recent empirical research has shown that considering sustainability factors within investment practices does not come at a cost (i.e. through a reduced opportunity set) but allows for competitive returns. Furthermore, the growing market and resulting competition in the wake of sustainable investing going mainstream has the welcome effect to compress fees for such products. Hence, staying informed about recent trends in sustainable investing is imperative no matter what the main motivation is. READ MORE>>

Equity Valuation: Science, Art, or Craft?

December 2017 | READ MORE>>

This study underlines additional problems when it comes to valuing IPOs and private equity: Both are sensitive to the timing of the offer, suffer from information asymmetry, and are more subject to behavioral elements than is the case for shares of listed firms. In the case of IPOs in particular, the authors discuss how communication strategies and media hype play an important role in the IPO valuation/pricing process. READ MORE>>

A Primer for Investment Trustees: Understanding Investment Committee Responsibilities

October 2017 | READ MORE>>

This “primer,” written as if addressed to a new investment trustee for a university, is a comprehensive discussion of investment issues relevant not only to investment trustees but also to investment professionals who work with trustees. Taking an individual step by step through the process of responsible trusteeship, it offers a solid introduction to basic investment principles. READ MORE>>
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Literature Reviews

Shorter overview on a particular subject plus annotated bibliography, encouraging readers to do further research.

The Equity Risk Premium: A Contextual Literature Review

November 2017 | READ MORE>>

Research into the equity risk premium, often considered the most important number in finance, falls into three broad groupings. First, researchers have measured the margin by which equity total returns have exceeded fixed-income or cash returns over long historical periods and have projected this measure of the equity risk premium into the future. Second, the dividend discount model—or a variant of it, such as an earnings discount model—is used to estimate the future return on an equity index, and the fixed-income or cash yield is then subtracted to arrive at an equity risk premium expectation or forecast. Third, academics have used macroeconomic techniques to estimate what premium investors might rationally require for taking the risk of equities. Current thinking emphasizes the second, or dividend discount, approach and projects an equity risk premium centered on 3½% to 4%. READ MORE>>

Technical Analysis: Modern Perspectives

November 2016 | READ MORE>>

Supply and demand are cornerstones of economics and the interaction of these forces is believed to explain price changes in all freely traded markets. Scarcity tends to result in increased prices and abundance generally leads to lower prices. In financial markets, technical analysis provides a framework for informing investment management decisions by applying a supply and demand methodology to market prices. Technical analysts employ a disciplined, systematic approach that seeks to minimize the impact of behavioral biases and emotions that could adversely affect investment performance. Analysts employ ratio analysis, comparative analysis and other techniques that are similar to the tools developed to analyze financial statements. READ MORE>>

Longevity Risk and Retirement Income Planning

December 2015 | READ MORE>>

The past 50 years have seen an abundance of research on retirement planning and longevity risk. Reviewed here is the academic side of the research and its varied viewpoints and nuances. The evolution of retirement risk models, retirement portfolio problems and solutions, and annuities are some of the many topics covered. READ MORE>>
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RF Briefs

Short, easy to read content on topics important to the global investment profession.

New Vistas in Risk Profiling

August 2017 | READ MORE>>

Risk profiling is fraught with misunderstandings that lead to ill-advised approaches to determining suitable investment solutions for individuals. The author discusses how we should think about the crucial elements of (a) risk tolerance, (b) behavioural risk attitudes, and (c) risk capacity. He uses a simple thought experiment to examine a stripped-down investor situation and define the essential features and exact role of each of the components of an investor’s overall risk profile. He examines options for eliciting and measuring risk tolerance and considers some promising avenues for future methods. READ MORE>>

FinTech and RegTech in a Nutshell, and the Future in a Sandbox

July 2017 | READ MORE>>

The 2008 global financial crisis represented a pivotal moment that separated prior phases of the development of financial technology (FinTech) and regulatory technology (RegTech) from the current paradigm. Today, FinTech has entered a phase of rapid development marked by the proliferation of startups and other new entrants, such as IT and ecommerce firms that have fragmented the financial services market. This new era presents fresh challenges for regulators and highlights why the evolution of FinTech necessitates a parallel development of RegTech. In particular, regulators must develop a robust new framework that promotes innovation and market confidence, aided by the use of regulatory “sandboxes.” Certain RegTech developments today are highlighting the path toward another paradigm shift, which will be marked by a reconceptualization of the nature of financial regulation. READ MORE>>

Financial Risk Tolerance: A Psychometric Review

June 2017 | READ MORE>>

This content provides financial analysts, investment professionals, and financial planners with a review of how financial risk-tolerance tests can and should be evaluated. It begins by clarifying terms related to risk taking and is followed by a broad overview of two important measurement terms: validity and reliability. It concludes with examples for practice. READ MORE>>
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