Prudential Financial and Asset-Liability Management

Aditya Vikram Sunderam; Luis M. Viceira

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Supplement | HBS Case Collection | September 2018

Prudential Financial and Asset-Liability Management

by Aditya Vikram Sunderam and Luis M. Viceira

Language: English

Format: Electronic

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Citation:

Sunderam, Aditya Vikram, and Luis M. Viceira. "Prudential Financial and Asset-Liability Management." Harvard Business School Spreadsheet Supplement 219-726, September 2018.

About the Authors

Adi Sunderam

Marvin Bower Associate Professor

Finance

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Luis M. Viceira

George E. Bates Professor
Senior Associate Dean, Executive Education

Finance

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Article | Journal of Financial Economics | March 2020

Do Fire Sales Create Externalities?

Sergey Chernenko and Adi Sunderam

We develop three novel measures of how much of the price impact of their trading different mutual funds internalize. We show that mutual funds that internalize more of their price impact hold larger cash buffers and use these buffers more aggressively to accommodate inflows and outflows. As a result, stocks held by these funds have lower volatility, and flows out of these funds have smaller spillover effects on other funds holding the same securities. Our results provide evidence of meaningful fire sale externalities in the mutual fund industry.

Keywords: fire sales; externalities; Investment Funds; Price; Financial Liquidity; Management;

Citation:
Chernenko, Sergey, and Adi Sunderam. "Do Fire Sales Create Externalities?" Journal of Financial Economics 135, no. 3 (March 2020): 602–628. View Details

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Case | HBS Case Collection | August 2019 (Revised December 2019)

Zillow Offers: Winning Online Real Estate 2.0

Luis Viceira, Marco Di Maggio and Allison Ciechanover

Founded in 2005, Zillow had become the leading online real estate and home-related marketplace. The brand was recognized as a trusted resource for players in the real estate market, providing information and transparency on home prices. Revenue, which was historically derived primarily from advertising fees paid by realtors and mortgage lenders, totaled $1.3 billion in 2018. This was in the process of changing, however. The company had entered the direct home buying and selling market in 2017. To Zillow, the move was a logical extension of its business model. Research showed that there was pent up desire to sell homes, but that sellers disliked the conventional process. Zillow Offers made home selling easy and fast – for sellers of homes that met certain criteria, Zillow Offers made an offer within 48 hours of the seller submitting a request for an offer online. Zillow Offers provided sellers a fair price and a guaranteed cash close, then performed renovations and hoped to sell the home within a target of 90 days, although actual times varied by market. The company’s stock was more volatile in the period since launching Zillow Offers and some industry observers wondered if it was in part due to the market’s perception of the risks associated with the new business. CEO Rich Barton believed the “instant buyer” or iBuyer market could one day account for up to 30% of all domestic real estate transactions and that Zillow Offers could bring in an additional $20 billion in annual revenue within three to five years. But there remained work to be done to improve transaction metrics, fend off competition from well-funded startups and incumbent realtors, and convince shareholders of the attractiveness of the new businesses.

Keywords: real estate; corporate culture; Intermediation; brokerage; Startup; Evaluating business investments; Property; Technology; Business Model; Expansion; Business Startups; Real Estate Industry; Media and Broadcasting Industry; United States;

Citation:
Viceira, Luis, Marco Di Maggio, and Allison Ciechanover. "Zillow Offers: Winning Online Real Estate 2.0." Harvard Business School Case 220-021, August 2019. (Revised December 2019.) View Details

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Case | HBS Case Collection | August 2019 (Revised November 2019)

Sustainable Investing at J.P. Morgan Private Bank

Sara Fleiss and Luis Viceira

This case features Monica Issar, then Global Head of J.P. Morgan Endowments & Foundations Group in the Private Bank. In just five years, she and J.P. Morgan have grown the Outsourced Chief Investment Officer (OCIO) business from $5 billion in AUM from primarily family foundations to $30 billion AUM of institutional capital. Increasingly, clients are requesting guidelines that reflect not only their risk and return preferences, but also their social or environmental preferences. Monica Issar contemplates a variety of strategic questions around how best to engage clients and their needs moving forward on these non-traditional financial dimensions while balancing the bank's fiduciary role.

Keywords: sustainability; Investment; Management; Strategy; Social Issues; Environmental Sustainability; Banking Industry;

Citation:
Fleiss, Sara, and Luis Viceira. "Sustainable Investing at J.P. Morgan Private Bank." Harvard Business School Case 220-016, August 2019. (Revised November 2019.) View Details

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Prudential Financial and Asset-Liability Management

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