Secured, Or Unsecured, That Is The Question

The S&P U.S. Issued High Yield Corporate Bond Index is returning 4.01% year-to-date with a weighted average yield of 5.78%.  Similar to high yield bonds—whose credit ratings are below the investment grade cutoff of ‘BBB’ assigned by the rating agencies—are senior loans. William Shakespeare’s famous quote from Hamlet, “To be, or not to be, that Read more […]

Tennis Without a Net

Indices existed well before the launch of indexed financial products. The Dow Jones Industrial Average, e.g., goes back to 1896; the first indexed institutional portfolios appeared in the 1970s, the first index mutual fund in 1976, and the first index-tracking exchange traded funds in the 1990s. In all these cases, the index provider was independent Read more […]

Gold’s Crash Outshines the Need for Heat

Year-to-Date S&P GSCI is off 6.81% S&P GSCI Gold had its biggest one day loss ever,-9.3%, on April 15, 2013, since its inception on Jan 6, 1978, and hit its lowest level since Feb 2, 2011. The decline was due to worries about central bank sales, especially from Cyprus, but also, from the Fed winding Read more […]

Equity Auguries?

The market for credit default swaps is typically not well-understood by equity investors (myself emphatically included).  This is unfortunate, since the price of insuring a company’s bonds (which is what a CDS measures) can sometimes provide insight into the same company’s equity securities. For example, in September 2012, the S&P 500 financials sector began to Read more […]

Special Report: US vs. European Banks CDS

The S&P/ISDA CDS U.S. Financials Select 10 Index held steady widening by a diminutive amount [3bps] for the month of March. The same cannot be said for the S&P/ISDA CDS European Banks Select 15 Index whose spread widened by 35bps in tandem with the news of the banking crisis in Cyprus. Cypriot banks remained closed Read more […]

Gold No Longer Worth Its Weight

Year-to-Date Dow Jones-UBS Commodity Index is off 5.41% Gold, the commodity with the heaviest 2013 target weight in the DJ-UBS CI, no longer is the most heavily weighted commodity in the index, falling from 10.8% to 9.5% since the beginning of the year. The DJ-UBS CI Natural Gas Subindex, the best performer YTD, has now Read more […]

Joining the Index Club

The Wall Street Journal recently urged its readers to “Beware of Index Funds That Aren’t” (http://on.wsj.com/Xycv7P). If some soi-disant index funds “aren’t,” which ones “are” — or, at the most basic level, what is an index? A good working definition of an index is this: an index is a portfolio in which constituent and weighting Read more […]

Monkey See, Monkey Do?

A recently published paper  received a fair amount of publicity for its suggestion that portfolios selected randomly by monkeys would have outperformed a capitalization-weighted index of the same universe.  In recent years it seems like everyone is bashing cap-weighted indices, so it was probably only a matter of time until apes took a shot. Maybe Read more […]

Market Attributes: Index Dashboard

Simple juxtapositions can sometimes produce insight, or so at least runs the theory behind our just-introduced monthly U.S. index dashboard: http://us.spindices.com/documents/commentary/dashboard_032813_2914.pdf. For the first quarter of 2013, e.g., we can observe that: The equity markets were very strong (no revelation there), with both the Dow Industrials and S&P 500 both up more than 10% and Read more […]