Category Archives: Strategy

$60 Trillion – Yes, Trillion – Committed to Investing This Way

Index providers often work with large pensions and asset managers, so it’s difficult to surprise us with big numbers. Recently, though, I saw a chart with some staggering sums. I am pasting it below. What is the PRI? This chart shows the investment world’s adoption of the “PRI”, the Principles for Responsible Investment. In 2006, Read more […]

The Worst of Both Worlds

For active managers, investment results are partly a function of skill and partly a function of the environment in which that skill is exercised.  Even perfect foresight has only conditional value.  Imagine, for example, a manager who can always identify the top quintile of performers in a given market.  If the top quintile outperforms the index as Read more […]

When Smart Beta Fails

How should an investor in a factor (or “smart beta”) index judge its performance?  In this respect at least, smart beta is like any other strategy: you should evaluate it against the claims that its vendors made before you bought it. This requires some subtlety.  Smart beta methodologies pick stocks based on fundamental or technical Read more […]

Rising Rates Revisited…

The prospect for and ramifications of rising interest rates have surfaced time and again in recent years. Whether and when the Fed will raise rates next is anyone’s guess. But as we’ve noted before, the correlation between higher interest rates and equity declines has grown tenuous in recent history.  Since 1991, the S&P 500 has Read more […]

Gaining Insight Into New Zealand’s Dividends

Why a New Zealand Dividend Strategy Now? New Zealand companies pay out more profits as dividends than many other countries in the world, with an aggregate distribution of 84% of earnings in 2015, much higher than the 48% in the U.S. and 54% globally (see Exhibit 1). One primary reason for this high payout ratio Read more […]

The Fed: No Change In Rates Amidst Puzzling Policies

Questions and some answers on issues facing, or created at, the Fed Raise Rates? Not very likely next week at the September 21st FOMC meeting.  Recent data including August jobs report, declines in Industrial Production and Retail Sales and comments from FOMC members argue against a move now.  The November 2nd meeting is just days Read more […]

What’s Next from the Fed

Last weekend the Federal Reserve held its annual symposium at Jackson Hole Wyoming and discussed near and longer term monetary issues. No Rate hike in September There are three FOMC meetings remaining this year: September 21st, November 2nd and December 14th. While there is no rule that all interest rate target changes must come at Read more […]

Worse Than Marxism?

The investment community was bombarded last week with a paper arguing that passive investing is “worse than Marxism.”  That any putatively-serious observer can compare an investment strategy, even one he doesn’t like, with a political ideology responsible for the deaths of millions boggles the imagination, but maybe I’m just too sensitive.  The paper’s argument seems Read more […]

The VIX is Low, But Should You Fasten Your Seatbelt?

VIX has spent the whole of August below 14, and remains – at time of writing – close to its lowest levels in two years.  But the present calm may be dependent on a short-term seasonal effect; and we are approaching the traditional period where it ends. August is traditionally a quiet month for U.S. Read more […]

The Walking Dead Return (as Active ETFs)

In AMC’s “The Walking Dead,” we meet Rick Grimes after he awakens from a coma to find himself in post-apocalyptic world filled with legions of zombies.  Rick calls these zombies “walkers,” but as each season goes by (season seven starts this October) different groups name them other things, like biters, roamers, lurkers, etc.  The names Read more […]