Category Archives: Strategy

Islamic Index Market Update: August 2015

August Highlights:  Most Major Islamic Indices Closely Track Conventional Benchmarks in 2015 Emerging Markets Plunge Over China Growth Concerns, Weak Commodity Prices and Prospects for Fed Tightening MENA Equities Drop Sharply as Oil Falls Most Shariah-compliant benchmark have performed similarly to their conventional counterparts in 2015 as Financials have generated returns roughly in-line with the Read more […]

The bad kind of volatility?

Markets across the globe were rocked by volatility from sources new and old last month. The old was a play-by-play repeat of the “taper tantrum” as capital fled from emerging markets in anticipation of a September date for the first rise in U.S. rates since 2006. The new was triggered by evidence that the rollercoaster Read more […]

Perseverance and Low Vol

“He conquers who endures.” ~Persius Weak markets tend to make low volatility indices shine. As a strategy that attenuates the performance of the broader market, the S&P 500 Low Volatility Index had lagged the benchmark S&P 500 by 1.22% from the beginning of 2015 thru July 31. As of last Friday, the tide has shifted Read more […]

Probability of Fed Rate Hike in September Rises

The FOMC released the minutes of its July 28-29 meeting earlier today.  While there was no discussion of raising the Fed funds target at the July meeting, all agreed that economic conditions are improving and that the labor market is getting stronger. The inflation rate is below the Fed’s 2% target and will be watched Read more […]

Rising Dispersion and the Value of Stock Picking

The U.S. equity market’s dispersion rose substantially in July, ending the month at 7.3%, well above June 30’s 4.5%.  Dispersion for the S&P MidCap 400® and S&P SmallCap 600® likewise rose in July, and the component correlation of all three indices declined.  This is not surprising in a month dominated by individual earnings announcements.  Lower correlation Read more […]

China and Memories of 1987

China’s actions in recent days to shore up its market are reminiscent of actions taken in the US after the 1987 stock market crash. Changes in monetary policy, support for margin calls and stock buybacks were all tried in 1987.  At the same time, some other steps taken in China currently – restricting short selling and halting Read more […]

ETFs and Hedge Funds: At What Price Performance?

With the final numbers for the second quarter of 2015 now available, the research firm ETFGI today brought some long-anticipated news: the size of the exchange traded funds market has finally exceeded that of its older, more well-to-do cousins.  It may have taken a little longer than we expected, but ETFs are now a bigger Read more […]

Inside the S&P 500: Adds, Drops and Tall Tales

Each year about 20 to 25 stocks leave the S&P 500 and are replaced with other stocks that meet the guidelines for index membership.  These changes are usually announced five trading days before the index change. Given the size of the asset pool that tracks the S&P 500 — ETFs, index funds and institutional portfolios Read more […]

Greek Fatigue

Greece’s financial problems have dominated headlines in the past week.  Here, e.g., are some excerpts from The Wall Street Journal: Saturday 20 June.  “U.S. stocks ended  lower Friday… worries over Greece sent investors piling into ultrasafe Treasury bonds….” Tuesday 23 June.  “U.S. stocks advanced Monday…lifted by gains in health-care and financial shares as well as Read more […]

Selection or Allocation?

Mr Burge: Do you know Lord Astor has made a statement to the police saying that these allegations of yours are absolutely untrue? Mandy Rice-Davies: He would, wouldn’t he?  At the trial of Stephen Ward, 29 June 1963, in The Guardian 1 July 1963 Like the unfortunate viscount, there’s a certain predictability to the advocates of active Read more […]