The impact of exchanges rates on international real estate portfolio allocation

This paper, examines whether the asset holdings and weights of an international real estate portfolio using exchange rate adjusted returns are essentially the same or radically different from those based on unadjusted returns. The results indicate that the portfolio compositions produced by exchange rate adjusted returns are markedly different from those based on unadjusted returns. However following the introduction of the single currency the differences in portfolio composition are much less pronounced. The findings have a practical consequence for the investor because they suggest that following the introduction of the single currency international investors can concentrate on the real estate fundamentals when making their portfolio choices, rather than worry about the implications of exchange rate risk.

Visuotactile learning and body representation: an ERP study with rubber hands and rubber objects

We studied how the integration of seen and felt tactile stimulation modulates somatosensory processing, and investigated whether visuotactile integration depends on temporal contiguity of stimulation, and its coherence with a pre-existing body representation. During training, participants viewed a rubber hand or a rubber object that was tapped either synchronously with stimulation of their own hand, or in an uncorrelated fashion. In a subsequent test phase, somatosensory event-related potentials (ERPs) were recorded to tactile stimulation of the left or right hand, to assess how tactile processing was affected by previous visuotactile experience during training. An enhanced somatosensory N140 component was elicited after synchronous, compared with uncorrelated, visuotactile training, irrespective of whether participants viewed a rubber hand or rubber object. This early effect of visuotactile integration on somatosensory processing is interpreted as a candidate electrophysiological correlate of the rubber hand illusion that is determined by temporal contiguity, but not by pre-existing body representations. ERPmodulations were observed beyond 200msec post-stimulus, suggesting an attentional bias induced by visuotactile training. These late modulations were absent when the stimulation of a rubber hand and the participant’s own hand was uncorrelated during training, suggesting that pre-existing body representations may affect later stages of tactile processing.

Can objects perform?: agency and thingliness in contemporary sculpture and installation

In his 1967 essay, “Art and Objecthood”, Michael Fried bemoaned the theatricality of minimalist sculpture, which replaced the presentness of compositional sculpture with the staging of an experience for the viewer as performer. His argument has since been inverted by artists and art writers invested in the idea of sculptures as props forming part of an artistic experience economy. This discourse has accompanied the rise of relational aesthetics as a dominant paradigm for contemporary art. More recently, however, there has been a turn away from relationality to ‘object-oriented’ art, where objects are seen to stage their own theatrical experiences, performing themselves without requiring the activation of a viewer’s body. We trace parallels between the philosophy of Bruno Latour and the “Speculative Materialism” group and this emerging trend in sculpture. In ascribing agency to objects, Latour proposes a radical shift from philosophy’s traditional investigation of the relationship between the mind and the world. Drawn to the idea that matter can be creative, artists have embraced his thinking. However, we argue that this has lead to a generalized, universalizing humanism that disables political action. Moreover, it undermines the potential for anti-humanist critique latent in object-oriented philosophy.

Manipulating resource allocation in plants

The distribution of nutrients and assimilates in different organs and tissues is in a constant state of flux throughout the growth and development of a plant. At key stages during the life cycle profound changes occur, and perhaps one of the most critical of these is during seed filling. By restricting the competition for reserves in Arabidopsis plants, the ability to manipulate seed size, seed weight, or seed content has been explored. Removal of secondary inflorescences and lateral branches resulted in a stimulation of elongation of the primary inflorescence and an increase in the distance between siliques. The pruning treatment also led to the development of longer and larger siliques that contained fewer, bigger seeds. This seems to be a consequence of a reduction in the number of ovules that develop and an increase in the fatty acid content of the seeds that mature. The data show that shoot architecture could have a substantial impact on the partitioning of reserves between vegetative and reproductive tissues and could be an important trait for selection in rapid phenotyping screens to optimize crop performance.

Asset allocation, cross-class correlation and the structure of property returns

Practical applications of portfolio optimisation tend to proceed on a “top down” basis where funds are allocated first at asset class level (between, say, bonds, cash, equities and real estate) and then, progressively, at sub-class level (within property to sectors, office, retail, industrial for example). While there are organisational benefits from such an approach, it can potentially lead to sub-optimal allocations when compared to a “global” or “side-by-side” optimisation. This will occur where there are correlations between sub-classes across the asset divide that are masked in aggregation – between, for instance, City offices and the performance of financial services stocks. This paper explores such sub-class linkages using UK monthly stock and property data. Exploratory analysis using clustering procedures and factor analysis suggests that property performance and equity performance are distinctive: there is little persuasive evidence of contemporaneous or lagged sub-class linkages. Formal tests of the equivalence of optimised portfolios using top-down and global approaches failed to demonstrate significant differences, whether or not allocations were constrained. While the results may be a function of measurement of market returns, it is those returns that are used to assess fund performance. Accordingly, the treatment of real estate as a distinct asset class with diversification potential seems justified.

Aligning asset allocation and real estate investment: some lessons from the last cycle

Asset allocation is concerned with the development of multi--‐asset portfolio strategies that are likely to meet an investor’s objectives based on the interaction of expected returns, risk, correlation and implementation from a range of distinct asset classes or beta sources. Challenges associated with the discipline are often particularly significant in private markets. Specifically, composition differences between the ‘index’ or ‘benchmark’ universe and the investible universe mean that there can often be substantial and meaningful deviations between the investment characteristics implied in asset allocation decisions and those delivered by investment teams. For example, while allocation decisions are often based on relatively low--‐risk diversified real estate ‘equity’ exposure, implementation decisions frequently include exposure to higher risk forms of the asset class as well as investments in debt based instruments. These differences can have a meaningful impact on the contribution of the asset class to the overall portfolio and, therefore, lead to a potential misalignment between asset allocation decisions and implementation. Despite this, the key conclusion from this paper is not that real estate investors should become slaves to a narrowly defined mandate based on IPD / NCREIF or other forms of benchmark replication. The discussion suggests that such an approach would likely lead to the underutilization of real estate in multi--‐asset portfolio strategies. Instead, it is that to achieve asset allocation alignment, real estate exposure should be divided into multiple pools representing distinct forms of the asset class. In addition, the paper suggests that associated investment guidelines and processes should be collaborative and reflect the portfolio wide asset allocation objectives of each pool. Further, where appropriate they should specifically target potential for ‘additional’ beta or, more marginally, ‘alpha’.