Risk reduction and diversification in UK commercial property portfolios

The issue of diversification in direct real estate investment portfolios has been widely studied in academic and practitioner literature. Most work, however, has been done using either partially aggregated data or data for small samples of individual properties. This paper reports results from tests of both risk reduction and diversification that use the records of 10,000+ UK properties tracked by Investment Property Databank. It provides, for the first time, robust estimates of the diversification gains attainable given the returns, risks and cross‐correlations across the individual properties available to fund managers. The results quantify the number of assets and amount of money needed to construct both ‘balanced’ and ‘specialist’ property portfolios by direct investment. Target numbers will vary according to the objectives of investors and the degree to which tracking error is tolerated. The top‐level results are consistent with previous work, showing that a large measure of risk reduction can be achieved with portfolios of 30–50 properties, but full diversification of specific risk can only be achieved in very large portfolios. However, the paper extends previous work by demonstrating on a single, large dataset the implications of different methods of calculating risk reduction, and also by showing more disaggregated results relevant to the construction of specialist, sector‐focussed funds.

Synergistic effects of mixing cocksfoot and sainfoin on in vitro rumen fermentation: role of condensed tannins

Some bioactive secondary metabolites in forage legumes can cause digestive interactions, so that the rumen fermentation pattern of a mixture of forages can differ from the average values of its components. The objective of this study was to investigate the potential role of condensed tannins (CT) on the synergistic effects between one grass species, cocksfoot, and one CT-containing legume species, sainfoin, on in vitro rumen fermentation characteristics. Cocksfoot and sainfoin in different proportions (in g/kg, 1000:0, 750:250, 500:500, 250:750 and 0:1000) were incubated under anaerobic conditions in culture bottles containing buffered rumen fluid from sheep. Incubations were carried out using artificial saliva with and without polyethylene glycol (PEG), which binds and thus inactivates CT. Rumen fermentation parameters describing the degradation and the fate of the energetic and nitrogenous substrates were measured at 3.5 and 24 h. At the early fermentation stage, when the sainfoin level increased from 0 to 1000 g/kg, the ammonia concentration in the medium quadratically decreased from 3.20 to 0.53 mmol/l in absence of PEG (P<0.01) but not in its presence. This result demonstrates that sainfoin CT decreased the rumen degradation of the proteins in the whole mixture, including the proteins in cocksfoot, rather than just the proteins in sainfoin. Interestingly, the total gas and methane productions were lower in mixtures incubated in absence of PEG than in presence of PEG (P<0.001) while no significant PEG effect was observed on digestibility. At the late fermentation stage, a positive quadratic effect on dry matter digestibility was detected without PEG (P<0.05), indicating a synergistic action of cocksfoot plus sainfoin on plant substrate degradation due to CT. The presence of PEG increased gas production (P<0.001) and NH3-N concentration in the medium (P<0.001). Our results suggest that CT could allow a better utilization of plant substrates in mixtures by the rumen ecosystem by improving the partitioning of degraded substrates toward lower gas losses, and decreasing the protein degradation.

Insertion of a hydroxido bridge into a diphenoxido dinuclear copper(II) complex: drastic change of the magnetic property from strong antiferromagnetic to ferromagnetic and enhancement in the catecholase activity

A diphenoxido-bridged dinuclear copper(II) complex, [Cu2L2(ClO4)(2)] (1), has been synthesized using a tridentate reduced Schiff base ligand, 2-[[2-(diethylamino)-ethylamino]methyl]phenol (HL). The addition of triethylamine to the methanolic solution of this complex produced a novel triple bridged (double phenoxido and single hydroxido) dinuclear copper(II) complex, [Cu2L2(OH)]ClO4 (2). Both complexes 1 and 2 were characterized by X-ray structural analyses, variable-temperature magnetic susceptibility measurements, and spectroscopic methods. In 1, the two phenoxido bridges are equatorial-equatorial and the species shows strong antiferromagnetic coupling with J = -615.6(6.1) cm(-1). The inclusion of the equatorial-equatorial hydroxido bridge in 2 changes the Cu center dot center dot center dot Cu distance from 3.018 angstrom (avg.) to 2.798 angstrom (avg.), the positions of the phenoxido bridges to axial-equatorial, and the magnetic coupling to ferromagnetic with J = 50.1(1.4) cm(-1). Using 3,5-di-tert-butylcatechol as the substrate, the catecholase activity of the complexes has been studied in a methanol solution; compound 2 shows higher catecholase activity (k(cat) = 233.4 h(-1)) than compound 1 (k(cat) = 93.6 h(-1)). Both complexes generate identical species in solution, and they are interconvertible simply by changing the pH of their solutions. The higher catecholase activity of 2 seems to be due to the presence of the OH group, which increases the pH of its solution.

Fenced in: Common property struggles in the management of communal rangelands in central Eastern Cape Province, South Africa

This paper takes as its starting point the assertion that current rangeland management in the central Eastern Cape Province (former Ciskei) of South Africa, is characterised primarily by an ‘open access’ approach. Empirical material drawn from three case-study communities in the region is used to examine the main barriers to management of rangeland as a ‘commons’. The general inability to define and enforce rights to particular grazing resourses in the face of competing claims from ‘outsiders’, as well as inadequate local institutions responsible for rangeland management are highlighted as being of key importance. These are often exacerbated by lack of available grazing land, diffuse user groups and local political and ethnic divisions. Many of these problems have a strong legacy in historical apartheid policies such as forced resettlement and betterment planning. On this basis it is argued that policy should focus on facilitating the emergence of effective, local institutions for rangeland management. Given the limited grazing available to many communities in the region, a critical aspect of this will be finding ways to legitimise current patterns of extensive resource use, which traverse existing ‘community’ boundaries. However, this runs counter to recent legislation, which strongly links community management with legal ownership of land within strict boundaries often defined through fencing. Finding ways to overcome this apparent disjuncture between theory and policy will be vital for the effective management of common pool grazing resources in the region.

The distribution of London residential property prices and the role of spatial lock-in

Much of mainstream economic analysis assumes that markets adjust smoothly, through prices, to changes in economic conditions. However, this is not necessarily the case for local housing markets, whose spatial structures may exhibit persistence, so that conditions may not be those most suited to the requirements of modern-day living. Persistence can arise from the existence of transaction costs. The paper tests the proposition that housing markets in Inner London exhibit a degree of path dependence, through the construction of a three-equation model, and examines the impact of variables constructed for the 19th and early 20th centuries on modern house prices. These include 19th-century social structures, slum clearance programmes and the 1908 underground network. Each is found to be significant. The tests require the construction of novel historical datasets, which are also described in the paper.

Stirring and mixing in two-dimensional divergent flow

While stirring and mixing properties in the stratosphere are reasonably well understood in the context of balanced (slow) dynamics, as is evidenced in numerous studies of chaotic advection, the strongly enhanced presence of high-frequency gravity waves in the mesosphere gives rise to a significant unbalanced (fast) component to the flow. The present investigation analyses result from two idealized shallow-water numerical simulations representative of stratospheric and mesospheric dynamics on a quasi-horizontal isentropic surface. A generalization of the Hua–Klein Eulerian diagnostic to divergent flow reveals that velocity gradients are strongly influenced by the unbalanced component of the flow. The Lagrangian diagnostic of patchiness nevertheless demonstrates the persistence of coherent features in the zonal component of the flow, in contrast to the destruction of coherent features in the meridional component. Single-particle statistics demonstrate t2 scaling for both the stratospheric and mesospheric regimes in the case of zonal dispersion, and distinctive scaling laws for the two regimes in the case of meridional dispersion. This is in contrast to two-particle statistics, which in the mesospheric (unbalanced) regime demonstrate a more rapid approach to Richardson’s t3 law in the case of zonal dispersion and is evidence of enhanced meridional dispersion.

A Lagrangian model of air-mass photochemistry and mixing using a trajectory ensemble: the Cambridge Tropospheric Trajectory model of Chemistry And Transport (CiTTyCAT) version 4.2

A Lagrangian model of photochemistry and mixing is described (CiTTyCAT, stemming from the Cambridge Tropospheric Trajectory model of Chemistry And Transport), which is suitable for transport and chemistry studies throughout the troposphere. Over the last five years, the model has been developed in parallel at several different institutions and here those developments have been incorporated into one "community" model and documented for the first time. The key photochemical developments include a new scheme for biogenic volatile organic compounds and updated emissions schemes. The key physical development is to evolve composition following an ensemble of trajectories within neighbouring air-masses, including a simple scheme for mixing between them via an evolving "background profile", both within the boundary layer and free troposphere. The model runs along trajectories pre-calculated using winds and temperature from meteorological analyses. In addition, boundary layer height and precipitation rates, output from the analysis model, are interpolated to trajectory points and used as inputs to the mixing and wet deposition schemes. The model is most suitable in regimes when the effects of small-scale turbulent mixing are slow relative to advection by the resolved winds so that coherent air-masses form with distinct composition and strong gradients between them. Such air-masses can persist for many days while stretching, folding and thinning. Lagrangian models offer a useful framework for picking apart the processes of air-mass evolution over inter-continental distances, without being hindered by the numerical diffusion inherent to global Eulerian models. The model, including different box and trajectory modes, is described and some output for each of the modes is presented for evaluation. The model is available for download from a Subversion-controlled repository by contacting the corresponding authors.

Property loss potentials for European midlatitude storms in a changing climate

Winter storms of the midlatitudes are an important factor for property losses caused by natural hazards over Europe. The storm series in early 1990 and late 1999 led to enormous economic damages and insured claims. Although significant trends in North Atlantic/European storm activity have not been identified for the last few decades, recent studies provide evidence that under anthropogenic climate change the number of extreme storms could increase, whereas the total number of cyclones may be slightly reduced. In this study, loss potentials derived from an ensemble of climate models using a simple storm damage model under climate change conditions are shown. For the United Kingdom and Germany ensemble-mean storm-related losses are found to increase by up to 37%. Furthermore, the interannual variability of extreme events will increase leading to a higher risk of extreme storm activity and related losses.

On the nature of large-scale mixing in the stratosphere and mesosphere

Studies of tracer transport in the stratosphere have shown that adiabatic quasi-horizontal tracer evolution is controlled primarily by the large-scale low-frequency component of the flow. This behavior is consistent with the concept of chaotic advection, wherein the Eulerian velocity field is spatially coherent and temporally quasi-regular on timescales over which the Lagrangian evolution is chaotic. In this study, winds from a middle atmosphere general circulation model (the Canadian Middle Atmosphere Model) are used to compare and contrast the nature of tracer evolution in the stratosphere and mesosphere. It is found that the concept of chaotic advection is relevant in the stratosphere but not in the mesosphere. The explanation for this behavior is the increased strength of gravity wave activity in the mesosphere as compared with the stratosphere, which leads to shallower kinetic energy spectra on synoptic scales and a much shorter Eulerian correlation time. The shallower kinetic energy spectra imply that tracer evolution in the mesosphere is spectrally local, in contrast with the spectrally nonlocal regime that prevails in the stratosphere. This means that tracer advection calculations in the mesosphere are controlled primarily by the gravity wave spectrum and are intrinsically resolution dependent.

On the group-velocity property for wave-activity conservation laws

The density and the flux of wave-activity conservation laws are generally required to satisfy the group-velocity property: under the WKB approximation (i.e., for nearly monochromatic small-amplitude waves in a slowly varying medium), the flux divided by the density equals the group velocity. It is shown that this property is automatically satisfied if, under the WKB approximation, the only source of rapid variations in the density and the flux lies in the wave phase. A particular form of the density, based on a self-adjoint operator, is proposed as a systematic choice for a density verifying this condition.

Chaotic mixing and transport in Rossby-wave critical layers

A simple, dynamically consistent model of mixing and transport in Rossby-wave critical layers is obtained from the well-known Stewartson–Warn–Warn (SWW) solution of Rossby-wave critical-layer theory. The SWW solution is thought to be a useful conceptual model of Rossby-wave breaking in the stratosphere. Chaotic advection in the model is a consequence of the interaction between a stationary and a transient Rossby wave. Mixing and transport are characterized separately with a number of quantitative diagnostics (e.g. mean-square dispersion, lobe dynamics, and spectral moments), and with particular emphasis on the dynamics of the tracer field itself. The parameter dependences of the diagnostics are examined: transport tends to increase monotonically with increasing perturbation amplitude whereas mixing does not. The robustness of the results is investigated by stochastically perturbing the transient-wave phase speed. The two-wave chaotic advection model is contrasted with a stochastic single-wave model. It is shown that the effects of chaotic advection cannot be captured by stochasticity alone.