DWS Investments opens research institute
DWS Investments has joined the small group of asset managers linking up with universities to launch research efforts, as the industry looks outside its own community for competitive edges.
DWS’s Global Financial Institute (www.dgfi.com) publishes papers from its own experts, but also professors from Cambridge University, and other tertiary institutions in the US and Asia.
DGFI contributors will include DWS’ own CIO Asoka Wöhrmann, chief economist Johannes Müller, and head of research Petra Pflaum. Dr. Henning Stein is the director, and Lord John Eatwell, president of Queens’ College, Cambridge, will be chairman of the DGFI Foundation.
Professor Eatwell said: “DGFI’s mission of providing serious thought leadership that seeks to identify the long-term trends underlying today’s volatile markets is exactly what is needed in the present economic environment.”
DWS joins peers such as Winton Capital Management and Man Group, which have financed independent research linked to tertiary study.
Winton has research departments in west London, Oxford and Hong Kong, and backed the establishment of the Winton Institute for Monetary History in Oxford in 2010.
Man Group is behind the Man Research Laboratory and the Oxford-Man Institute of Quantitative Finance, in Oxford.
DWS has started its own institute’s activities with a paper on the future of interest rates, by Jagjit Chadha, professor of economics at the University of Kent and an associate of the Centre for International Macroeconomics and Finance at Cambridge University.
It tackles issues such as whether key rates in some industrialised nations will climb back from present lows, and whether slowing growth in BRIC nations – most recently China – will lead their rates to fall.
Chadha said: “My analysis suggests that there are two regimes for real rates: those for normal times are positive and vary with the global economic cycle, while those that deal with economic dislocation are negative.
“Only once growth is secured will real rates rise quickly to more normal levels. One reason is that the banks themselves have a strong appetite for capital, in order to limit any increase in funding costs that may result from capital inadequacy – apparent or real.
“That will start to crank up real rates, given a limited pool of savings. It therefore seems likely that, over the medium term, real yields will be in the range of 2% to 4%.”
Dr Asoka Wöhrmann, DWS CIO, said current low rates in Europe and the US are the “direct result of the strong and sustained response by monetary policy makers to the financial crisis and persistent global imbalances”.
DWS believes inflation has peaked in emerging markets, leaving room for further rate cuts there, as well.