Morningstar Ibbotson Conference

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2012 Conference

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Agenda

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		Click here to download the agenda for the 2012 Morningstar Ibbotson Conference.
	Agenda
		Thursday, February 23

	7:00a – 9:00a	Registration & Breakfast

	8:00a	Welcome Address

	8:15a – 12:00p	Morning Sessions

	12:15p	Keynote Speaker/Lunch

	2:00p – 4:40p	Afternoon Sessions

	6:00p – 8:00p	Cocktail Reception

		Friday, February 24

	7:00a – 9:00a	Breakfast Buffet

	8:00a - 11:55a	Sessions

	11:55a	Sessions

	12:00p	Conference Concludes

	Keynote Speaker
		United States Then, Europe Now
		Thomas J. Sargent, Winner of the 2011 Nobel Prize in Economic Sciences, Professor of Economics and Business at New York University

		Under the Articles of Confederation, the central government of the United States had limited power to tax. That made it difficult for it to service large debts that the government had incurred during our War of Independence, with the consequence that debt traded at deep discounts.

		That situation framed a U.S.\ fiscal crisis of the 1780s. A political revolution — for that was what our founders scuttling of the Articles of Confederation in favor of the Constitution of the United States of America was — solved the fiscal crisis by transferring authority to levy tariffs from the states to the federal government. The Constitution and Acts of the First Congress of the United States in August 1790 gave Congress authority to raise enough revenues to service a big government debt. In 1790, the Congress carried out a comprehensive bailout of state government’s debts, another part of a grand bargain that made creditors of the states become advocates of ample federal taxes. That bailout created unwarranted expectations about future federal bailouts that a costly episode in the early 1840s corrected. Aspects of these early U.S.\ circumstances and choices remind me of the European Union today.

	General Sessions
		What Investors Really Want: Lessons from Behavioral Finance
		Meir Statman, Ph.D., Glenn Klimek Professor of Finance, Santa Clara University

		We want more from our investments than profits equal to risks. We want to nurture hope for riches and banish fear of poverty. We want to win, be #1, and beat the market. We want to feel pride when our investments bring gains and avoid regret when they inflict losses. We want the status conveyed by hedge funds and the virtue conveyed by socially responsible funds. We want financial markets to be fair but we search for an edge that would let us win. We want to leave a legacy for our children when we are gone. And we want to leave nothing for the tax man.

		An understanding of investors’ wants and a distinction between wants and errors matters to all investment professionals, from money managers, to plan sponsors, and to financial advisors.

		DC Industry: Today and Tomorrow
		Charlie Nelson, President, Great-West Retirement Services

		More and more participants are having to rely just on their DC plan and Social Security to get them to a comfortable retirement. Join Charlie Nelson from Great-West as he discusses the significant issues, opportunities, and challenges that the retirement industry faces in helping these participants prepare for a secure financial future. He also will delve into the business implications for the industry, and the huge market potential that exists for those who can help make DC retirement plans more successful.

		Economic & Market Outlook with Liz Ann Sonders
		Liz Ann Sonders, Chief Investment Strategist of Charles Schwab & Co., Inc.

		Liz Ann will give an update on the state of the markets and conduct a lively discussion on the forces that are expected to shape our economic and market landscape. She will focus on the global economy, inflation, housing, jobs and the markets, including investor sentiment and behavior.

		Economic Outlook for 2012
		William A Strauss, Senior Economist and Economic Advisor, Federal Reserve Bank of Chicago

		The “Great Recession” of 2008 and 2009 ended in the middle of 2009 with significant impacts on the economy. The economy experienced outsized losses in the housing, manufacturing and job markets. Yet, what should be a robust recovery is not occurring, nor expected. Consumers are saving at an increased pace, limiting the growth of consumer spending. Credit conditions, while significantly improved from what existed during the recession, remain relatively tight and will act as a headwind to growth. Mr. Strauss will look at the performance of the overall macro economy with specific attention paid to key economic sectors and indicators.

		The Importance of Asset Allocation – A Quarter Century of Confusion
		Roger Ibbotson, Ph.D., Founder, Ibbotson Associates, Professor of Finance, Yale School of Management, and Partner, Zebra Capital Management

		The "importance" of asset allocation continues to be one of the trickiest and more controversial subjects among financial professionals. Attempts to clarify the issues often result in more confusion. In 2011, Ibbotson’s article, “The Importance of Asset Allocation,” won the Financial Analysts Journal Graham & Dodd Award for Best Perspective article. Roger Ibbotson will pinpoint the sources of confusion, show how investment portfolios can be characterized as asset classes, style factors, and security selections, while separating active from passive bets.

	Breakout Sessions
		Ibbotson’s Fundamental Dynamic Asset Allocation Program
		Daniel Needham, Managing Director, Ibbotson Australia
		Audience - General
		Technical Level: Moderate
		Topic: Tactical Asset Allocation
		Adding value through dynamic or tactical asset allocation is extremely difficult. Daniel Needham from our Australian team examines the shortcomings of many popular short-term models, finding that longer term valuation metrics and models—such as CAPE, the q-ratio, the GMO model, and John Hussman's model—are more likely to add long-term value.
		Morningstar Investment Management Economic Outlook
		Francisco Torralba, Ph.D., Economist, Morningstar Investment Management
		Audience - General
		Technical Level: Low to Moderate
		Topic: Economics
		It’s widely believed that in September 2011 the U.S. economy slipped back into recession. Our in-house economist, Francisco Torralba, offers his perspective and will discuss Morningstar Investment Management's global economic outlook, and what it could mean for your business, the U.S. economy, and financial markets.
		Selecting Great Managers
		Bill Harding, Head of Manager Research, Morningstar Investment Management
		Audience - General
		Technical Level: Low to Moderate
		Topic: Fund Analysis
		While most investors are familiar with Morningstar’s individual investor- and advisor-focused lenses for evaluating mutual funds, Bill Harding, the head of our research division, delves into the sophisticated qualitative and quantitative lenses that we use to uncover best-in-breed managers.
		Target Date Glide Path Instability
		Jeremy Stempien, Senior Consultant, Morningstar Investment Management
		Audience - Plan Sponsors, Target Date Stakeholders
		Technical Level: Low to Moderate
		Topic: Fund Analysis
		In 2011 Jeremy Stempien from our retirement division co-authored a paper that explored how target date providers often change the glide paths within their fund families over time—often with very little warning or reason. In this session he will shed light on the ever-changing glide paths of the largest providers and introduce a new metric that will help plan sponsors monitor glide path stability.
		Analyzing Stable Value
		Daniel Farkas, Investment Consultant, Morningstar Investment Management
		Audience - Plan Sponsors, Insurance, Advisors
		Technical Level: Moderate
		Topic: Asset Allocation, Insurance
		Guaranteed investment products—such as Stable Value Funds and annuities—are taking retirement plan lineups by storm. Yet, due to their artificially smoothed returns they do not do well in an analytical world created for mark-to-mark investments without guarantees. Daniel Farkas will discuss the methodologies for adjusting risk estimates for credit and liquidity risks embedded in guaranteed products and demonstrate their potential role in a diversified asset allocation.
		Morningstar’s New Fund Analyst Ratings
		John Rekenthaler, Vice President, Research, Morningstar, Inc.
		Audience - General
		Technical Level: Low
		Topic: Fund Analysis
		Morningstar’s Fund Analyst team recently introduced forward-looking fund ratings to complement its purely historical and data-driven Star Ratings. Morningstar's John Rekenthaler will explain the methodology behind these new ratings and compare and contrast them to the historical Star Ratings.
		The 'Myth' of Risk-Based Asset Allocation
		Maciej Kowara, CFA, Ph.D., Senior Research Analyst, Morningstar Investment Management
		Audience - General
		Technical Level: Moderate
		Topic: Asset Allocation
		In recent years, asset managers have suggested that risk-based asset allocation is inherently superior to asset allocation based on asset classes. Maciej Kowara, from our research group, proves mathematically that neither approach is inherently superior to one another and provides intuitive examples.
		Next Generation Fund of Funds Optimization
		James Xiong, CFA, Ph.D., Senior Research Consultant, Morningstar Investment Management
		Audience - Insurance, Advisers
		Technical Level: Very Technical
		Topic: Portfolio Construction and Fund Analysis
		Most institutional portfolios are built using a two step process: an asset allocation optimization followed by a fund of funds optimization. In recent years the traditional Markowitz asset allocation optimization has been enhanced to account for return distributions that don’t follow the standard bell curve; yet, there is an even greater need for a fund of funds optimization framework that accounts for the non-normal returns associated with investment strategies, especially alternative strategies. Morningstar’s, James Xiong, introduces the framework for a next generation fund of funds optimizer that accounts for these non-normal qualities that will help investors determine the optimal amount to allocate to each manager. Additionally, he will demonstrate the usefulness of coskewness and cokurtosis in predicting mutual fund performance.
		Selecting and Using a Target Date Benchmark
		Tom Idzorek, CFA Global Chief Investment Officer, Morningstar Investment Management
		Audience – Plan Sponsors, Target Date Stakeholders
		Technical Level: Low
		Topic: Fund Analysis
		Now that a wide range of target maturity benchmarks from established benchmark creators are available, the challenge for today’s target date fund stakeholder is to select the most appropriate one given the fund family they are trying to benchmark. In the first part of this presentation we introduce key qualitative aspects to consider when selecting a target maturity benchmark family as well as three simple quantitative measures for determining the “goodness of fit” between a fund family and a target maturity benchmark family. In the second half of the presentation, assuming that both a target date fund family and a target date benchmark have been selected (rightly or wrongly), we explore the appropriate use of a target date benchmark, including a concrete example of how to benchmark a target date fund / fund family.
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