When does direct real estate improve portfolio performance?

For over twenty years researchers have been recommending that investors diversify their portfolios by adding direct real estate. Based on the tenets of modern portfolio theory (MPT) investors are told that the primary reason they should include direct real estate is that they will enjoy decreased volatility (risk) through increased diversification. However, the MPT methodology hides where this reduction in risk originates. To over come this deficiency we use a four-quadrant approach to break down the co-movement between direct real estate and equities and bonds into negative and positive periods. Then using data for the last 25-years we show that for about 70% of the time a holding in direct real estate would have hurt portfolio returns, i.e. when the other assets showed positive performance. In other words, for only about 30% of the time would a holding in direct real estate lead to improvements in portfolio returns. However, this increase in performance occurs when the alternative asset showed negative returns. In addition, adding direct real estate always leads to reductions in portfolio risk, especially on the downside. In other words, although adding direct real estate helps the investor to avoid large losses it also reduces the potential for large gains. Thus, if the goal of the investor is offsetting losses, then the results show that direct real estate would have been of some benefit. So in answer to the question when does direct real estate improve portfolio performance the answer is on the downside, i.e. when it is most needed.

Changes in the relative importance of sector and regional factors: 1987-2002

A stylised fact in the real estate portfolio diversification literature is that sector (property-type) effects are relatively more important than regional (geographical) factors in determining property returns. Thus, for those portfolio managers who follow a top-down approach to portfolio management, they should first choose in which sectors to invest and then select the best properties in each market. However, the question arises as to whether the dominance of the sector effects relative to regional effects is constant. If not property fund managers will need to take account of regional effects in developing their portfolio strategy. Using monthly data over the period 1987:1 to 2002:12 for a sample of over 1000 properties the results show that the sector-specific factors dominate the regional-specific factors for the vast majority of the time. Nonetheless, there are periods when the regional factors are of equal or greater importance than the sector effects. In particular, the sector effects tend to dominate during volatile periods of the real estate cycle; however, during calmer periods the sector and regional effects are of equal importance. These findings suggest that the sector effects are still the most important aspect in the development of an active portfolio strategy.

When's your birthday? The self-reference effect in retrieval of dates

Material encoded with reference to the self is better remembered. One interpretation of this effect is that the self operates to organise retrieval of memories. We were motivated to find out whether this organisational principle extended to everyday information and for material not explicitly related to the self. Participants generated friends' birthdays from memory and then gave their own birthday. We found that participants were particularly likely to recall birthdays from on or around the date of their own birthday. Thus, memory for birthdays clusters around self-relevant information, even when there is no specific attempt to recall self-related material. Birthdays clustered somewhat around the time of testing, important dates in the calendar, and for a close other, but not to the extent of the participants' birthdays. We suggest this is a demonstration of the organisational structure of the self in memory. Copyright (C) 2010 John Wiley & Sons, Ltd.

Projections of when temperature change will exceed 2°C above pre-industrial levels

Climate change projections are usually presented as 'snapshots' of change at a particular time in the future. Instead, we consider the key question 'when will specific temperature thresholds will be exceeded?'. Framing the question as "when might something happen (either permanently or temporarily)?" rather than "what might happen?" demonstrates that lowering future emissions will delay the crossing of temperature thresholds and buy valuable time for planning adaptation. For example, in higher greenhouse gas emission scenarios, a global average 2°C warming threshold is likely to be crossed by 2060, whereas in a lower emissions scenario, the crossing of this threshold is delayed up to several decades. On regional scales, however, the 2°C threshold will probably be exceeded over large parts of Eurasia, North Africa and Canada by 2040 if emissions continue to increase- well within the lifetime of many people living now.

Temporal-envelope constancy of speech in rooms and the perceptual weighting of frequency bands

Three experiments measured constancy in speech perception, using natural-speech messages or noise-band vocoder versions of them. The eight vocoder-bands had equally log-spaced center-frequencies and the shapes of corresponding “auditory” filters. Consequently, the bands had the temporal envelopes that arise in these auditory filters when the speech is played. The “sir” or “stir” test-words were distinguished by degrees of amplitude modulation, and played in the context; “next you’ll get _ to click on.” Listeners identified test-words appropriately, even in the vocoder conditions where the speech had a “noise-like” quality. Constancy was assessed by comparing the identification of test-words with low or high levels of room reflections across conditions where the context had either a low or a high level of reflections. Constancy was obtained with both the natural and the vocoded speech, indicating that the effect arises through temporal-envelope processing. Two further experiments assessed perceptual weighting of the different bands, both in the test word and in the context. The resulting weighting functions both increase monotonically with frequency, following the spectral characteristics of the test-word’s [s]. It is suggested that these two weighting functions are similar because they both come about through the perceptual grouping of the test-word’s bands.

Selfishness and altruism can coexist when help is subject to diminishing returns

Altruism and selfishness are 30–50% heritable in man in both Western and non-Western populations. This genetically based variation in altruism and selfishness requires explanation. In non-human animals, altruism is generally directed towards relatives, and satisfies the condition known as Hamilton's rule. This nepotistic altruism evolves under natural selection only if the ratio of the benefit of receiving help to the cost of giving it exceeds a value that depends on the relatedness of the individuals involved. Standard analyses assume that the benefit provided by each individual is the same but it is plausible in some cases that as more individuals contribute, help is subject to diminishing returns. We analyse this situation using a single-locus two-allele model of selection in a diploid population with the altruistic allele dominant to the selfish allele. The analysis requires calculation of the relationship between the fitnesses of the genotypes and the frequencies of the genes. The fitnesses vary not only with the genotype of the individual but also with the distribution of phenotypes amongst the sibs of the individual and this depends on the genotypes of his parents. These calculations are not possible by direct fitness or ESS methods but are possible using population genetics. Our analysis shows that diminishing returns change the operation of natural selection and the outcome can now be a stable equilibrium between altruistic and selfish alleles rather than the elimination of one allele or the other. We thus provide a plausible genetic model of kin selection that leads to the stable coexistence in the same population of both altruistic and selfish individuals. This may explain reported genetic variation in altruism in man.

The type and frequency of interactions that occur between staff and children outside in Early Years Foundation Stage settings during a fixed playtime period when there are tricycles available

This study reports on an investigation into adult and child interactions observed in the outdoor play environment in four Local Authority early years foundation stage settings in England. In this instance the common two features across the settings were the presence of tricycles and a timetabled outdoor play period. In total, across the four schools, there were 204 children. The study aimed to gain an understanding of the nature of the dialogues between staff and children, that is, the types of exchange that occurred when either the child approached an adult or the adult approached a child. The most frequent type of utterance was also analysed. The study concludes that adults in these settings spoke more than children and the greatest type of utterance was that of the adult about domestic matters. When the child initiated the conversation there were more extended child utterances than domestic utterances. This may suggest that children wish to be involved in conversations of depth and meaning and that staff need to become aware of how to develop this conversational language with children.

Global trajectory optimisation: can we prune the solution space when considering deep space manoeuvres?

This document contains a report on the work done under the ESA/Ariadna study 06/4101 on the global optimization of space trajectories with multiple gravity assist (GA) and deep space manoeuvres (DSM). The study was performed by a joint team of scientists from the University of Reading and the University of Glasgow.