TY - BOOK ID - 84783816 TI - Institutionalizing Countercyclical Investment : A Framework for Long-term Asset Owners PY - 2016 SN - 1513513516 1513513796 1513513338 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Asset allocation. KW - Business cycles. KW - Financial risk management. KW - Risk management KW - Economic cycles KW - Economic fluctuations KW - Cycles KW - Allocation of assets KW - Investments KW - Portfolio management KW - Finance: General KW - Financial Risk Management KW - Investments: Stocks KW - Public Finance KW - Portfolio Choice KW - Investment Decisions KW - Pension Funds KW - Non-bank Financial Institutions KW - Financial Instruments KW - Institutional Investors KW - Financial Institutions and Services: Government Policy and Regulation KW - International Financial Markets KW - Social Security and Public Pensions KW - General Financial Markets: Government Policy and Regulation KW - Finance KW - Pensions KW - Investment & securities KW - Asset allocation KW - Asset management KW - Pension spending KW - Stocks KW - Financial sector stability KW - Asset and liability management KW - Expenditure KW - Financial institutions KW - Financial sector policy and analysis KW - Asset-liability management KW - Financial services industry KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:84783816 AB - Do portfolio shifts by the world’s largest asset owners respond procyclically to past returns, or countercyclically to valuations? And if countercyclical investment (with both market-stabilizing and return-generating properties) is a public and private good, how might asset owners be empowered to do more of it? These two questions motivate this study. Based on analysis of representative portfolios (totaling $24 trillion) for a range of asset owners (central banks, pension funds, insurers and endowments), portfolio changes typically appear procyclical. In response, I suggest a framework aimed at jointly bolstering long-term returns and financial stability should: (i) embed governance practices to mitigate ‘multi-year return chasing;’ (ii) rebalance to benchmarks with factor exposures best suited to long-term investors; (iii) minimize principal-agent frictions; (iv) calibrate risk management to minimize long-term shortfall risk (not short-term price volatility); and (v) ensure regulatory conventions do not amplify procyclicality at the worst possible times. ER -