Yun Sun argues that China's policy failures on Myanmar in 2011 are rooted in several strategic post-election misjudgements. Following President Thein Sein's inauguration in March 2011, the Sino–Myanmar relationship was initially boosted by the establishment of a “comprehensive strategic cooperative partnership,” and China sought reciprocation for its long-time diplomatic support in the form of Myanmar's endorsement of China's positions on regional multilateral forums. A series of events since August have frustrated China's aspirations, however, including Myanmar's suspension of the Myitsone dam and the rapid improvement of its relationship with the West. Several strategic misjudgements contributed to China's miscalculations, including on the democratic momentum of the Myanmar government, on the U.S. –Myanmar engagement and on China's political and economic influence in the country. China's previous definition of Myanmar as one of China's “few loyal friends” and the foundation of its strategic blueprint has been fundamentally shaken, and China is recalibrating its expectations regarding future policies.

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The author argues that the democratic reform in Myanmar is rooted in profound internal and external factors. Since the beginning of the reform, the changes in Myanmar have taken tolls in a series of China's existing interests inside the country. Economically, Chinese investments have come under increasing scrutiny, criticism, and even oppositions, threatening the viability of strategic projects such as the oil and gas pipelines. Politically, the initial success of the democratic reform in Myanmar raises questions about Beijing's continuous resistance to reform. Strategically, the changes in Myanmar undercut China's original blueprint about the strategic utilities of Myanmar for China at ASEAN, in the Indian Ocean and more broadly in the region. In light of the changes, China has adjusted its policy toward Myanmar. Not only has Beijing dramatically reduced its economic investments in Myanmar, it also cooled down the political ties while established relations with the democratic oppositions. At the same time, China also launched massive public relations campaigns inside Myanmar aimed at improving its image and relations with the local communities.

We examine the role of factor models and simple performance heuristics in investor decision-making using Morningstar’s 2002 rating methodology change. Before the change, flows strongly correlated with CAPM alphas. After, when funds are ranked by size and book-to-market groups, flows become more sensitive to 3-factor alphas (FF3). Flows to a matched institutional sample (same managers/strategies) follow FF3 before and after the change but are unrelated to the CAPM. Placebo tests with sector funds and other factor loadings show no effects. Our results imply that improvements in simple performance heuristics can result in more sophisticated risk adjustment by retail investors.

This paper estimates the effect of competition from low-cost index funds on fees in the money management industry. A difference-indifferences analysis exploiting the staggered entry of index funds finds that while actively managed funds sold directly to retail investors reduce fees by six percent, those sold through brokers increase fees by four percent. Additionally, actively managed funds, especially closet indexers, shift away from holding the index portfolio. A market segmentation model illustrates that beyond a price-competition effect, the index fund entry creates a selection effect that isolates the least-price-sensitive investors and results in a price increase for this group.