3 Reasons To Love Equities When Rates Are Rising

Equities haven’t been the most lovable asset class lately but there are reasons to love them despite these prickly times.  The first reason to love equities in rising rate times is that they have gained significantly. Since 1971, the S&P 500 (TR) has gained about 20% on average in rising rate periods, has gained 8 of Read more […]

The Hunt for Value With High Earnings Expectations in Asia

In our previous blog, Earnings Revision Strategies in Asia, we discussed how those strategies performed in Asia. Although they worked well in various markets except Japan, there were some implementation challenges, such as high portfolio turnover and low liquidity for small-cap stocks. Therefore, implementing this strategy in combination with other fundamental factors with lower overall Read more […]

Inflation News and Fears

Two weeks ago inflation fears sparked by a surprise jump in wage gains sent the markets into a tail spin. This week will deliver two rounds of inflation news with the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday.  Month to month changes in both the CPI and PPI Read more […]

A Case for Dividend Growth Strategies Part 1

There are two major types of dividend strategies: Dividend growers: those targeting stocks that consistently grow their dividends over time High dividend yielders: those focusing on stocks that pay a high dividend yield In our paper “A Case for Dividend Growth Strategies,” we compared dividend growth strategies to high-dividend-yielding strategies and concluded that dividend growers, Read more […]

Does the S&P/BMV Mexico Target Risk Index Series Provide Inflation Protection?

As of Dec. 31, 2017, the year-over-year change in inflation for Mexico registered at 6.77%, a figure that raised concerns within the pension fund industry. One of the key risks facing retirees is the erosion of purchasing power of investment returns due to high inflation. Developing economies, such as Mexico, are more susceptible to rising Read more […]

I’m Exhausted

T-G-I-F.  And I would’ve written something sooner about The Dow but the Wi-Fi in my underground bunker, where I retreated for the impending apocalypse, is spotty.  I’ll need to do something about that if this keeps up. Obviously, that’s a joke.  I don’t have Wi-Fi in my bunker.  But it’s no joke that this has Read more […]

Asian Fixed Income: China and the Global Bond Market

In a previous piece, we discussed that China’s lackluster performance had made it the worst-performing country in the Pan Asian bond market in 2017, and that it was the only country that closed the year in negative territory. The one-year total return of the S&P China Bond Index fell 0.29% last year (see Exhibit 1), Read more […]

As Volatility Returns to Equities, Corporate Bond Spreads Tighten Near Record Lows

Broad-based equity markets have been on a rollercoaster ride since Jan. 30, 2018, as market participants appear to be reassessing the impact of inflation and potential consequences from the recent tax reform. While volatility appears to be back, high-grade corporate bond spreads have tightened to levels not seen since 2007. Compared with the last episode Read more […]

Earnings Revision Strategies in Asia

Factor-based strategies have been regularly used by market participants in their portfolio construction process. Apart from the established factors like value, size, volatility, etc., research on alternative factors has remained important to explain sources of alpha. One such alternative factor is consensus analysts’ earnings forecasts. Ample empirical research exists that explains the market’s reaction to Read more […]

Energy Stocks Beat Oil Futures In Rising Inflation

There may be a legitimate concern about rising inflation since inflation has been under the Fed’s target for years and there is now very low unemployment with signs of accelerating economic growth.  The low unemployment rate and strong growth are probably positive for the stock market and the tax cuts may provide even more upside.  However, Read more […]