Center for Applied Research

Client-Driven Research

The Center for Applied Research (CAR) is an independent think tank that resides at State Street and comprises a team of researchers from across the globe.

CAR conducts targeted research designed to provide clients with strategic insights into issues that will shape the future of the investment industry.

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Influential Investor

The Folklore of Finance

How Beliefs and Behaviors Sabotage Success in the Investment Management Industry

The Center for Applied Research (CAR), an independent think tank, conducts research to provide strategic insights into issues shaping the future of the investment management industry. Our current study, The Folklore of Finance, takes an in-depth look at the standard measure of success for investment professionals — the production of alpha — and why that model must change for the industry to deliver true success.

To better understand the flawed beliefs and behaviors within the industry, what we describe as “folklore,” we examined the views of thousands of investors, investment providers, government officials and regulators across 19 countries over an 18-month period.

What we learned is that true success lies beyond what the industry previously accepted. It includes not only producing alpha — perhaps more importantly, it also requires helping investors achieve their long-term goals. We’ve outlined concrete steps that the industry must take to develop a new “Folklore of Finance.”

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Regional Snapshots

Regional Snapshots are coming soon.

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The Forgotten Investor

It has been more than three years since the passage of the Dodd-Frank Act, and it appears that individual investors couldn't care less. Or if they do, they have virtually no confidence that these changes will be effective. When it comes to priorities, half of investors say they spend more time reading free catalogues than reviewing their investment statements.

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Keep it Simple

It can be challenging to see through complexity due to the “Allure of the Expert.” Simplicity seems to be the theme of the day in much of society, and is best illustrated in products such as those from Apple which not only have clean lines, flat surfaces and distinct solid colors but also a user interface second to none in terms of simplicity. The investment world often seems immune to this trend.

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Influential Investor

In the current, post-crisis environment, asset owners struggle to make sense of conflicting advice. Practitioners and academics alike have advised asset owners to rethink their investment strategies, models and asset allocation decisions — and even question the very premise of portfolio diversification. This paper provides a roadmap for navigating asset allocation in a low-return world.

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Center for Applied Research

Liquid financial wealth is trending towards an upward trajectory; however, what that trajectory looks like varies from country to country.

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Influential Investor

The Influential Investor

How Investor Behavior is Redefining Performance

The Center for Applied Research (CAR) is an independent think tank that resides at State Street. CAR's current study, The Influential Investor, How Investor Behavior is Redefining Performance, looks at the forces that will shape the future of the investment management industry over the next decade.

Over the course of a 12-month period1, CAR collected the views of thousands of retail and institutional investors, asset managers, intermediaries and regulators from more than 60 countries. And, after extensive analysis of their responses, one thing became clear: The future of the investment industry will be determined by the actions investors take — healthy or unhealthy, rational or irrational. This is what is meant by the “influential investor.”

But how are investors acting? Why are they behaving that way? Is the industry delivering meaningful value?

Understanding the answers to these questions will be the key to generating sustainable returns in the future. Only then can the industry begin to define the most important word: Performance.

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The Influential Investor contains data from a study based on input from more than 3,300 investment management industry participants across 68 countries. The Center for Applied Research obtained this input through surveys of 2,725 investors, and 403 investment providers and government officials. Surveys were conducted through an online platform in collaboration with the Economist Intelligence Unit, Scorpio Partnership and TNS Finance Amsterdam. In addition, the Center for Applied Research conducted face-to-face interviews with 200 executives and government officials from around the world to gain qualitative insights.

1 Twelve-month period ending in November of 2012.