Tag Archives: institutional investor

Rising Rates Arrive

Which of the figures below belong together?   It’s obvious, even if analogies aren’t your strong suit, that A is like C and B is like D.  A and C are not like B and D. The economic relevance of this simple visual exercise is this: At its March 2017 meeting, the Federal Open Market Read more […]

Next Generation Retirement Investing

For many plan participants, the goal of a retirement account is to provide a steady stream of income that will sustain their standard of living in retirement. Therefore, participants need a framework that aligns the management of their savings with their retirement income goal. This framework has three related components: Risk management that addresses the Read more […]

Manager Outperformance: Is it Luck or Skill?

Over the years, we frequently hear from our SPIVA® and Persistence Scorecard readers that they have found their star manager or their own Warren Buffet—someone who can successfully beat the benchmark repeatedly.  Based on our 15 years of publishing the SPIVA U.S. Scorecard, we know that, on average, around 20% to 30% of domestic equity Read more […]

Rising Rates Environment Doesn’t Hurt All REITs

In a positive sign for the U.S. economy, the Federal Reserve raised the federal funds target rate in December 2016 and penciled in another three hikes in 2017.  While investors may welcome higher interest rates earned from their cash deposits, high-yielding instruments that carry debt can be adversely affected due to higher borrowing costs.  Conventional Read more […]

Monetary Cycles and the Fixed Income Market – What Can the Past Tell Us About the Current Cycle?

Rising rates are generally seen as bad news by fixed income market participants.  As rates go up, prices of fixed income assets are expected to go down.  However, returns (or losses) can vary depending on characteristics of the cycle, as well as the amount of income or carry available to cushion the decline in price. Read more […]

Valuations Are High but Dispersion Is Low

“Stocks Have Froth but No Bubble,” in today’s Wall Street Journal argues that while stocks are sitting at the highest valuations seen in many years, the market is not in a bubble.  Despite similarities to early 2000 by some measures, other distinguishing features of trading bubbles (such as high trading volume and high leverage) are Read more […]

Impact of Rising Interest Rates on Small-Cap Indices

Rising interest rates certainly has become a central investment theme going into 2017.  The 10-Year Treasury yield closed at 2.48% on Jan. 27, 2017, representing an increase of nearly 103 bps from six months ago.  Research has shown that equities tend to perform better following a rate hike, if inflation levels are moderate.  However, return Read more […]

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 […]

LIBOR at 1% for First Time in 7 Years – A Significant Level for Leveraged Loans

For the first time since May 2009, the three-month LIBOR reached 1% on Dec. 29, 2016.  LIBOR, which stands for London InterBank Offered Rate, is a benchmark interest rate that most of the world’s largest banks charge each other for short-term loans.  The most common rates for which LIBOR is quoted are for overnight, one-month, Read more […]

Quality: A Driving Factor of Small-Cap Returns

Much has been written about the performance differential between the two leading small-cap indices, the S&P SmallCap 600® and Russell 2000.  Over a long-term investment horizon, the S&P SmallCap 600 has outperformed the Russell 2000 with less risk.  Part of the performance differential can be attributed to the June Russell rebalancing effect.  As winners from Read more […]