Resiliency of the Capital Markets | CFA Institute Research & Policy Center

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src="/-/media/images/hero/rpc-theme-heros/building-captial-markets.jpg?w=2560&hash=84EEEEA8D804BA7B961FFC0CB0AC51CA" srcset="/-/media/images/hero/rpc-theme-heros/building-captial-markets.jpg?w=480&hash=75F2490D716824C46FD1EAA187C4113A 480w, /-/media/images/hero/rpc-theme-heros/building-captial-markets.jpg?w=768&hash=5563296DA3124AFAB9228BC7A84446F9 768w, /-/media/images/hero/rpc-theme-heros/building-captial-markets.jpg?w=1200&hash=42A38D558FBE688BD59613C6C6E4D654 1200w, /-/media/images/hero/rpc-theme-heros/building-captial-markets.jpg?w=2560&hash=84EEEEA8D804BA7B961FFC0CB0AC51CA 2560w" sizes="100%" alt="building-capital-markets"> </picture> <div class="spotlight-hero__container"> <div class="spotlight-hero__text"> <h1 class="spotlight-hero__title">Strengthening the Structural Resilience of the Capital Markets</h1> <a class="spotlight-hero__cta" href="https://rpc.cfainstitute.org/en/research/browse#sort=%40officialz32xdate%20descending&f:Theme=[Capital%20Markets]" >More Capital Markets Content</a> </div> </div> </section> <section class="article-grid">  <section class=" grid__item--full-width grid__item--inset grid__item--initial">  <ol class="anchors"> <li class="anchors__item"> <a class="anchors__link" href="#topSection"> Research & Blogs </a> </li> <li class="anchors__item"> <a class="anchors__link" href="#middleSection"> Policy in Action </a> </li> <li class="anchors__item"> <a class="anchors__link" href="#bottomSection"> Be Informed </a> </li> </ol>  </section>   <section id="topSection" class=" grid__item--full-width grid__item--inset grid__item--initial"> <div class="flex__container brand-card__container flex__container--1-up brand-card--horizontal@md brand-card--flipped brand-card--uneven" >  <a href="/en/research/surveys/2024/the-dollars-exorbitant-privilege" class="brand-card flex__item" ><img src="/-/media/images/cards/new-brand-concepts/us-currency.jpg?h=498&w=664&la=en&hash=6987BD16980BE4126D8DBE5EFC4AE393" class="brand-card__media media__ratio--wide" 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Kaplan, CFA, and Thomas M Idzorek, CFA</span> For almost three quarters of a century, lifecycle finance models and mean–variance optimization remained separate, but recent breakthroughs have produced combined models that answer critical financial planning questions linked to portfolio choice. </div> </div>  </a>  <a href="/en/research/foundation/2024/beyond-active-and-passive-investing" class="brand-card flex__item" ><img src="/-/media/images/cards/new-brand-people-at-work/women-alone-in-conference-room.jpg?h=444&w=664&la=en&hash=5F486260435BB24930F2CE06477397A7" class="brand-card__media media__ratio--double" loading="lazy" alt="women-alone-in-conference-room" /> <div class="brand-card__content"> <span class="brand-card__content-category">Research Foundation</span> <h4 class="brand-card__content-title">Beyond Active and Passive Investing: The Customization of Finance</h4> <div class="brand-card__content-description"> <span class="brand-card__content-meta">By Marc R. Reinganum, and Kenneth A. Blay</span> Although conventional wisdom predicts that passive investing will dominate the future, analysis of key trends indicates that active management will become more prevalent. </div> </div>  </a>  <a href="/en/research/surveys/2024/private-markets-governance-issues" class="brand-card flex__item" ><img src="/-/media/images/cards/new-brand-cityscapes/top-of-building-with-pool.jpg?h=442&w=664&la=en&hash=AE864A5DF0FAA855CAAA64528C449EBE" class="brand-card__media media__ratio--double" loading="lazy" alt="top-of-building-with-pool" /> <div class="brand-card__content"> <span class="brand-card__content-category">Survey Report</span> <h4 class="brand-card__content-title">Private Markets: Governance Issues Rise to the Fore</h4> <div class="brand-card__content-description"> <span class="brand-card__content-meta">By Stephen Deane, CFA</span> Private markets have ballooned since the Great Financial Crisis. While advocates hail their efficiency, critics call for more regulation. This report illuminates how private markets function and uses the results from our global survey to inform recommendations for investors and policymakers. </div> </div>  </a> </div> </section>   <section class=" grid__item--full-width grid__item--inset">  <div class="section__separator"> <h2 class="section__header"> Featured Blog </h2> </div>  <div class="flex__container brand-card__container flex__container--1-up brand-card--horizontal@md flex__container--large-column-gap" >  <a href="https://rpc.cfainstitute.org/en/blogpage#q=bf7558a61afba16c6e460c2695f03c1ae42ab7eb076d97359859c85b50d7" class="brand-card flex__item" ><img src="/-/media/images/cards/blogs/2024/reality-check.jpg?h=443&w=664&la=en&hash=09D20357DDB6F619FFFACF67F152E729" class="brand-card__media media__ratio--wide" loading="lazy" alt="A Reality Check on Private Markets: Part III" /> <div class="brand-card__content"> <span class="brand-card__content-category">Enterprising Investor </span> <h4 class="brand-card__content-title">A Reality Check on Private Markets: Part III</h4> <div class="brand-card__content-description"> <span class="brand-card__content-meta">22 Nov 2024</span> <em>This blog is the third in a three-part weekly series in which Ludovic Phalippou, PhD., frames the problem with how private markets are reported to produce superior performance—due to an excessive use of IRR as the de-facto performance measurement metric; offers techniques for critical evaluation of fund performance reports; and proposes alternative approaches to metrics and benchmarks.</em> <br /> <p>In the final post of his three-part series, University of Oxford professor Ludovic Phalippou, PhD, continues to unpack the challenges of using the internal rate of return (IRR) measure to evaluate private market performance. While IRR has long been the principal metric used in the sector, its reliance on early cash flows can lead to misleading results. This installment explores existing fixes, like modified IRR, and proposes a new approach: NAV-to-NAV IRR. While also imperfect, this alternative addresses biases by focusing on long-term returns and reducing distortions caused by early fund cash flows.</p> </div> </div>  </a> </div> </section>   <section id="middleSection" class=" grid__item--full-width grid__item--inset">  <div class="section__separator"> <h2 class="section__header"> Policy in Action </h2> </div>  <div class="flex__container brand-card__container flex__container--3-up@md flex__container--large-column-gap" >  <a href="/en/policy/comment-letters/2020-2024/uk-frc-on-the-sustainability-assurance-market" class="brand-card flex__item" ><img src="/-/media/images/cards/new-brand-landscape/ocean-near-field.jpg?h=475&w=664&la=en&hash=FF455201F4BE967D449DE04FE8BC283B" class="brand-card__media media__ratio--wide" loading="lazy" alt="Ocean near field" /> <div class="brand-card__content"> <span class="brand-card__content-category">Comment Letter</span> <h4 class="brand-card__content-title">Comment Letter to UK FRC on the Sustainability Assurance Market</h4> <div class="brand-card__content-description"> <span class="brand-card__content-meta">20 Jun 2024</span> CFA Institute and CFA Society United Kingdon comment on the FRC’s market study on the Assurance of Sustainability Reporting. </div> </div>  </a>  <a href="/en/policy/comment-letters/2020-2024/fasb-proposes-crypto-assets-accounting-standards-update" class="brand-card flex__item" ><img src="/-/media/images/cards/Lifestyle-and-Graphic/money-of-future.jpg?h=443&w=664&la=en&hash=350FCBB92F3142AA260346C6C47551E4" class="brand-card__media media__ratio--wide" loading="lazy" alt="money-of-future" /> <div class="brand-card__content"> <span class="brand-card__content-category">Comment Letter</span> <h4 class="brand-card__content-title">FASB Proposes Crypto Assets Accounting Standards Update</h4> <div class="brand-card__content-description"> <span class="brand-card__content-meta">08 Aug 2023</span> CFA Institute comments on the Financial Accounting Standard Board’s proposed accounting standards update for Intangibles—Goodwill and Other—Crypto Assets. </div> </div>  </a>  <a href="/en/research/reports/2024/report-on-the-review-of-the-listing-rules-in-the-eu" class="brand-card flex__item" ><img src="/-/media/images/cards/new-brand-cityscapes/brussels-eu.jpg?h=443&w=664&la=en&hash=B63270A7194E7EDC766493A21B59E1F1" class="brand-card__media media__ratio--wide" loading="lazy" alt="brussels-eu" /> <div class="brand-card__content"> <span class="brand-card__content-category">Research Report</span> <h4 class="brand-card__content-title">CFA Institute and BETTER FINANCE Report on the Review of the Listing Rules in the EU</h4> <div class="brand-card__content-description"> <span class="brand-card__content-meta">04 Apr 2024</span> This joint CFA Institute and BETTER FINANCE report (with input from the Federation of European Securities Exchanges) analyses the obstacles European companies face when seeking access to capital markets and obtaining funding through public markets. </div> </div>  </a> </div> <div class="flex__container brand-card__container flex__container--4-up@md flex__container--large-column-gap" > </div> </section>   <section id="bottomSection" class=" grid__item--full-width grid__item--inset">  <div class="section__separator"> <h2 class="section__header"> Be Informed </h2> </div>  <div class="flex__container brand-card__container flex__container--1-up brand-card--horizontal@md brand-card--flipped brand-card--uneven flex__container--medium-column-gap flex__container--medium-row-gap" >  <a href="https://www.systemicriskcouncil.org/" class="brand-card flex__item" rel="noopener noreferrer" target="_blank" ><img src="/-/media/images/cards/new-brand-people-at-work/man-reviewing-document-headset-on.jpg?h=443&w=664&la=en&hash=BD493C8299DB383BA8E713B42F18359C" class="brand-card__media media__ratio--wide" loading="lazy" alt="man-reviewing-document-headset-on" /> <div class="brand-card__content"> <span class="brand-card__content-category">Quarterly Report</span> <h4 class="brand-card__content-title">Systemic Risk Council Quarterly Report </h4> <div class="brand-card__content-description"> The Quarterly Systemic Report (QSR) summarizes the CFA Institute Systemic Risk Council’s recent activities and highlights the key systemic challenges affecting global markets and regulators. See the latest QSR. </div> </div>  </a> </div> <div class="flex__container brand-card__container flex__container--3-up@md flex__container--medium-column-gap" >  <a href="/en/themes/resilience/private-wealth-management" class="brand-card flex__item" ><img src="/-/media/images/cards/new-brand-cityscapes/private-wealth-management.jpg?h=478&w=664&la=en&hash=9E9F74530B47330E319C4B6A7FF4C12A" class="brand-card__media media__ratio--wide" loading="lazy" alt="Private Wealth Management" /> <div class="brand-card__content"> <span class="brand-card__content-category">Curated Content Collection</span> <h4 class="brand-card__content-title">Private Wealth Management</h4> <div class="brand-card__content-description"> Explore insights on Private Wealth Management with curated articles & expert analysis from the CFA Institute's Research and Policy Center. </div> </div>  </a>  <a href="https://take15audio.libsyn.com/stephen-foerster-cfa-trailblazers-heroes-and-crooks" class="brand-card flex__item" rel="noopener noreferrer" target="_blank" ><img src="/-/media/images/cards/podcast-page/2024/EI532Stephen-Foerster-CFA1920x1080.png?h=374&w=664&la=en&hash=ED8FD357AB14C3BB8E327E7B2D237F64" class="brand-card__media media__ratio--wide" loading="lazy" alt="Stephen Foerster, CFA" /> <div class="brand-card__content"> <span class="brand-card__content-category">Podcast</span> <h4 class="brand-card__content-title">Stephen Foerster, CFA: Trailblazers, Heroes, and Crooks</h4> <div class="brand-card__content-description"> Stephen Foerster, CFA, discusses his new book, Trailblazers Heroes and Crooks: Stories to Make You a Smarter Investor." In the book, Professor Foerster shares intriguing stories that illustrate valuable lessons for investors, drawing from diverse topics such as professional sports, fraud cases, and even wildlife encounters. </div> </div>  </a>  <a href="https://store.cfainstitute.org/private-markets-and-alternative-investments-certificate/" class="brand-card flex__item" rel="noopener noreferrer" target="_blank" ><img src="/-/media/images/cards/new-brand-people-at-work/man-woman-discussion.jpg?h=417&w=664&la=en&hash=EA2B940DB635BB4B2EC11BA59D21A1C6" class="brand-card__media media__ratio--wide" loading="lazy" alt="man-woman-discussion" /> <div class="brand-card__content"> <span class="brand-card__content-category">Certificate</span> <h4 class="brand-card__content-title">Private Markets and Alternative Investments Certificate</h4> <div class="brand-card__content-description"> Understand key features and differences between private equity, private credit, real estate and infrastructure, commodities, and hedge funds. </div> </div>  </a> <div class="flex__container brand-card__container flex__container--1-up brand-card--horizontal@md flex__container--medium-column-gap flex__container--medium-row-gap" >  <div class="brand-card flex__item"> <img src="/-/media/images/cards/new-brand-concepts/building-captial-markets.jpg?h=443&w=664&la=en&hash=0B6FDD3352104554B4592481158175BB" class="brand-card__media media__ratio--wide" loading="lazy" alt="Capital Markets" /> <div class="brand-card__content"> <h3 class="brand-card__content-title">Building Resilience: Exploring Capital Market Structural Dynamics and Policy Development </h3> <div class="brand-card__content-description"> <p>CFA Institute Research and Policy Center addresses how changes to the structure of capital markets affect the formation of capital, the providers of financial services, and the consumers of these services. </p> <p>The theme Strengthening the Structural Resilience of the Capital Markets underscores our commitment to the 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