Tag Archives: Equities

Try a TIPS Mixer in Your Equities Cocktail

As product manager of the S&P STRIDE Indices, I sometimes find myself extolling the virtues of Treasury Inflation-Protected Securities (TIPS), which I believe are an underappreciated asset class.  When inflation is relatively tame, people often ask why they should think about TIPS.  The answer is that TIPS don’t hedge expected inflation—that’s already priced in.  TIPS Read more […]

Minimizing the Pain of Regret

There are many extraordinarily talented minds engineering optimal portfolios, objectives of which include maximizing return per unit of risk, among others.  The capital asset pricing model (CAPM) posited the market portfolio as optimal in the mean/variance sense, but over the years, this notion has been questioned.  CAPM, like the efficient markets hypothesis (EMH), will likely Read more […]

Remarkably Unremarkable

In geopolitical terms 2016 was a tumultuous year. From the outcome of the Brexit referendum to the surprising conclusion of the U.S. presidential election, 2016 was a year of political surprises. The markets, braced or not, reacted differently in each case. We saw heightened correlation in the aftermath of Brexit and observed higher dispersion immediately Read more […]

Rising Rates and Inflation: Implications for Equities

Even a cursory glance at financial markets indicates that market participants are expecting some form of interest rate increase in the near future—there has been a sell-off in the 10-Year U.S. Treasury Bond market, and certain sectors that are expected to benefit from such a rate increase have gained.  For instance, the S&P 500 Financials Read more […]

Quiet Before the Storm

Quiet Before the Storm? Global markets seemingly remain unperturbed—despite homing in on Election Day in the U.S.  Although dispersion ticked up globally from September month-end levels, it is still sitting at below average levels as of October 31 in the U.S. Similarly, correlation is also well below average. Together these coordinates are pointing to particularly Read more […]

Dividend Volatility and Correlations

Equity markets are notoriously volatile, at least when compared to fixed income. Dividend payments, by contrast, while not fixed like many bond coupons, offer  market participants a much less volatile and more fixed income-like risk and return profile.  For the 25 years from 1990 to 2015, the annual variation in S&P 500® dividend points has Read more […]

Factor-Based Investing in US IG Corporate Bonds: Volatility and Credit Spread

Factor-based investing in equities is a well-established concept supported by over four decades of research. However, factor-based investing in fixed income remains in its nascent stages. Our analysis has found that factor-based fixed income strategies implemented in a rules-based, transparent index can represent an alternative tool for fixed income portfolio construction. In the next few Read more […]

Accessing China’s Growth via Dividends

In the current environment of short-term volatility amid a long-term positive outlook for the Chinese economy, a focus on growing, sustainable dividends in China’s equity markets could provide the opportunity to get a slice of the region’s structural growth and potential downside protection compared with a typical growth strategy, such as an earnings growth strategy. Read more […]

Offering Choices…The S&P BSE AllCap

The importance of choice is gaining ground in all areas of life.  I really resonated to the latest advertisement from Amazon, “Hindustani Dil Kahta Hai, Aur Dikhao, Aur Dikhao!” (“The Indian heart says, Show me more, show me more!”).  I would agree that choice is not only important in our day-to-day lives; it also holds Read more […]

Inside Factors: Value Investing

The godfathers of value investing, Graham and Dodd, pioneered the approach back in the 1930s. Since then, academics and practitioners have documented the value effect. However, given its widespread adoption and implementation, there is still no single consensus as to why value stocks provide above-market returns. Explanations broadly fall into two camps: the rational and Read more […]