Trend Following in Target-Date Funds and Analyst Research in Downturns

Summary

This Chinese-language research digest summarizes two separate studies. The first considers adding trend-following strategies to target-date funds in defined-contribution retirement plans. It argues that these funds may concentrate too much risk in equities and presents trend following as a possible way to reduce drawdowns and improve long-term risk-adjusted returns. The digest says the study discusses how to incorporate the strategy, but it does not provide implementation details or performance figures.

The second study examines whether sell-side analyst research matters more during economic downturns. Its reported empirical findings are that analyst revisions have larger stock-price effects, forecast errors per unit are lower, and reports become more frequent and detailed in downturns. Effects are described as stronger for firms that are harder to value. The summary attributes this pattern to greater analyst effort and investor reliance, but supplies no study design, sample, or caveats beyond the brief synopsis.

Key ideas

• The digest proposes trend following as a way to address equity concentration in target-date funds.
• The first study aims to reduce drawdowns and improve long-term risk-adjusted returns, but the digest omits implementation and results.
• The second study reports that analyst revisions have greater price impact during downturns.
• Analyst forecast errors per unit are reported to decline while reports become more frequent and detailed.
• Reported analyst effects are stronger for firms that are difficult to value.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.