Review: Treynor on Institutional Investing
- By Manoj Rengarajan
- Published April 24, 2009
- Business
Manoj Rengarajan
Reviewer Manoj
Rengarajan holds a Master of Financial Engineering - University of
California, Berkeley and he works in the investment management
industry and specializes in providing economic and investment outlook
and strategy for global equity and government bond markets. He has an
educational background in financial engineering, business, and
engineering, and professional interests include business,
finance, economics, technology and related areas.
Author: Jack L. Treynor
ISBN:
978-0-470-11875-7
Click Here To Purchase Treynor On Institutional Investing (Wiley Finance)
Jack Treynor's latest book on institutional
investing is a compilation of 97 research articles that were
originally published over the past 46 years in leading finance
journals. The book comprises of ten parts which covers extensively
almost all aspects of institutional investment management.
The
first part of the book deals with a crucial aspect of investment
management - risk. This section throws light on the differences
between business and statistical price risk and how to use portfolio
composition for estimating risk.
The section on risk
management also looks at the driver of the quality of municipal bonds
and an approach to manage risk when the target date on the portfolio
is several years away.
Treynor's seminal paper, “Toward a
Theory of Market Value of Risky Assets,” explains the Capital Asset
Pricing Model and the Security Market Line which are among the basic
tenets of modern finance theory.
The author provides a
solid framework to evaluate the performance of investment companies
and a study into whether mutual funds can really outperform the
broad market.
The section on Economics examines the Phillips
curve - the relationship between inflation and unemployment - and
further looks at the relationship between inflation and stock prices.
Among other gems of analysis, there is an piece on the trade off in
taxing income and capital to finance the fiscal burden.
The
section on trading analyzes the technical, information and value
motivations of market participants, while examining market
micro-structure and the basis for successful trading. These are
further expanded to implications for research and portfolio
management, as well as for policy makers.
Fundamental questions on accounting including a focus on
users of financial statements, basis of accrual accounting, issues in
corporate disclosures are explored.
The section on investment
value examines the value of productive physical assets, valuing
franchise in growth companies, intellectual property, value of
control, economic goodwill, and valuing ideas.
Active
management gives insights into how to use security analysis to
improve portfolio selection and returns to long term
investing.
Pensions explores the riskiness of assets in
pension plans and skewed incentives in such plans which leads to
adverse behavior by pension plan sponsors.
The book finally
concludes with a series of interesting cases which explores the range
of topics that have been covered in the book, including trading,
corporate governance, economics, and fund analysis, and also
discussion of recent events and current topics in investment
management.
Treynor on Institutional Investments is a great
compilation of thought provoking and insightful research in a wide
range of issues that are pertinent to the institutional investor.
This book is a must read for any professional in this area.
Click Here To Purchase Treynor On Institutional Investing (Wiley Finance)