Tag Archives: risk

October Outperformance for the S&P Risk Parity Indices

Traditionally known for spooky ghosts and witches, October was also a scary month for investors. In spite of an end-of-month rally, global stocks recorded their worst monthly loss since 2011, wiping out USD 5 trillion of investor value. Furthermore, investors were spooked by a rare simultaneous drop in bond prices. In short, this was not Read more […]

Can small-cap outperformance continue?

Small caps have materially outperformed large caps in 2018, with the S&P SmallCap 600 outpacing the S&P 500 7.80% to 2.58% between Dec. 29, 2017, and May 25, 2018.1 Below, I highlight what I believe to be the drivers of small-cap returns this year, and why I believe the trend could continue. Tax cuts have Read more […]

Understanding the Asset Class Risk Contribution of the S&P/BMV Mexico Target Risk Indices

The S&P/BMV Mexico Target Risk Index Series comprises four multi-asset class indices that are designed to serve as benchmarks for the Mexican pension system based on the risk tolerance levels of plan participants. Generally, younger individuals with longer time horizons until retirement will have greater risk tolerance and therefore higher exposure to risky assets such Read more […]

Rieger Report: Corporate Junk Bonds – “Danger, Will Robinson!”

The bond markets are certainly not “Lost in Space”1. There is good rationale as to why the bond markets are in the position they are today; compressed spreads are the result of low rates coupled with strong demand out pacing supply for yield assets.   However, the homogenization of the US corporate bond markets is worrisome and should Read more […]

Managing Risk While Heading for Returns

Returns are definitely one of the key influencers of investment decisions.  However, poor governance can result in failures, as too much emphasis on returns may result in ignoring the need to understand and manage the potential risk.  It is important to understand the risks associated with an investment strategy.  Risk can have different interpretations depending Read more […]

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 […]

In Search of the Low Volatility Anomaly

By now we’re very familiar with the oft discussed “Low Vol Anomaly”. Diverging from conventional finance theory, which tells us that risk and return are directly related, low volatility stocks have outperformed over time and, as expected, with lower volatility. Ample research and evidence point to the existence of a low volatility factor comparable to Read more […]

Home Price Bricks in Your Portfolio

In this post, we look at whether adding a home price index, as part of a multi-asset bundle, to a hypothetical portfolio could potentially improve its attributes. We created two portfolios, one comprised of equities and bonds (portfolio A), and a second that contained the elements of portfolio A plus commodities, home prices and infrastructure Read more […]

How Do You Communicate Risk Management in a Year When it Doesn’t Matter?

The S&P Dow Jones Indices Financial Advisor Channel has followed the progress of Exchange Traded Fund (ETF) Strategists with interest for over four years. In fact, we have developed close working relationships with many of those firms. They are often champions of indexing; power-users of ETF use in portfolio management. Whether one tracks ETF strategists Read more […]

Let Me Count The Ways To Get To 8%

Recently I visited a few pension plans and it amazes me how the policy views on risk differ to meet seemingly similar return goals. The National Association of State Retirement Administrators (NASRA) reported earlier this year that of 126 major state and municipal systems, 32 had set an assumed rate of return between 7.5% and 8%, 37 Read more […]