On Wednesday, Mr. Abe urged Japan's public pension funds, which control more than $2 trillion in investments, to shift those holdings toward higher-return equities and overseas assets from a heavy focus on domestic bonds.
Because it is no longer taking on new, younger clients and is essentially running off existing claims, it can afford to take fewer risks, so the with-profits fund will have to switch its investments progressively from higher-return equities to lower-return gilts.
What you need is some way to reduce your risk without entirely forsaking the long-term returns equities provide.
Much of TCI's 15% stake in CSX is in "total-return equity swaps" struck with brokers.
"With inflation at the current level, which means cash is giving negative returns, equity income is particularly attractive," he says.
If a bank made $1 billion in profits on $10 billion of equity, its return on equity would be 10 percent.
Funding with debt magnifies the sensitivity of the per-dollar return on equity, namely your return on equity to the per-dollar return on the underlying investment.
That made their return on equity appear particularly strong: since 1991, the return on equity for American companies has doubled, according to Andrew Smithers, who runs an eponymous consultancy.
Merrill Lynch and Goldman Sachs both report a return on equity of around 13%. Morgan Stanley reports a return on equity of 20%.
Return on equity should be north of 15%, and Capital One's return on equity is 19.7%.
Return on equity jumped from 9.1% to 9.8%-more than double the average equity return of American companies.
