Monthly Archives: July 2017
Mutual Fund Portfolios: Equal Weight or Cap Weight?
Equal-weighted indices typically outperform their cap-weighted counterparts (although 2017 so far has proven to be an exception to the general rule). This means that portfolio managers can usually create a performance tailwind by equal weighting rather than cap weighting their holdings. But do they? One way to assess this question is by using the Herfindahl-Hirschman…
ESG in India Today
Green infrastructure, especially clean and renewable energy, is at the heart of Indian ESG efforts today. Despite the U.S.’s withdrawal from the Paris Agreement, India stands with its commitments made at Paris. The Indian government’s commitment—in context of the recent ratification of the Paris Agreement—is to reduce emissions by 33% to 35% by 2030 and…
China’s Green Bond Markets
China has emerged as a global leader in green finance, especially green bonds, and from 2014 to 2016, it was the fastest-growing market in the region for sustainable investing. The total amount of green-labeled bond issuances amounted to USD 93.4 billion at the end of 2016 and reflected strong China-based issuances (40% of labeled green…
Bubbles and Housing
Home prices nationally are rising two to three times faster than inflation. They are up 5.5% from a year ago with some cities rising at double-digit rates. Looking at the chart of the S&P Corelogic Case-Shiller Home Price Indices, many are wondering if we’re in another housing bubble. While prices are rising, the following charts…
Asian Asset Owners Are Leapfrogging Into ESG
Sustainable investing has become particularly popular in Europe, across many countries. In the Asia Pacific region, certain countries such as Japan and Australia have shown stronger interest in ESG thanks to asset owner demand, availability of ESG data, and regulatory pressures. In the last couple of years, we have seen some of Japan’s largest institutional…
- Categories Sustainability
- Tags APAC, Australia, Japan, sustainability
- Categories
- Sustainability
Australian Markets: Mid Caps a Sweet Spot for Investors
We have previously taken a dive into performance differences between Australian market cap segments and observed that mid caps offer a “sweet spot” for market participants. Year-to-date, this message continues to resonate—the S&P/ASX MidCap 50 has returned 10.1% as of July 13, 2017. Meanwhile, corresponding large-, small-, and broad market indices have returned measurably less…
- Categories Equities, Factors
- Tags Australia, mid-cap equities, S&P/ASX MidCap 50, sectors, Size factor
U.S. Yield Curve Moved by Europe
The U.S. Treasury yield curve, as represented by the S&P U.S. Treasury Bond Current Indices, ended June 14, 2017, tighter (lower in yield) than the previous day. The importance of June 14 is that it was the day on which the U.S. Federal Reserve raised the target rate by 25 bps, from 1% to 1.25%. The following…
Understanding the Value Spectrum
Value investing, made famous by Benjamin Graham in his book Intelligent Investor nearly 70 years ago, is possibly the most well-known investment strategy. Although the strategy may appear simple at first glance—buying securities with prices that are trading at discount multiples than their fundamental values—it can be tricky to implement. For example, value can be…
- Categories Factors
- Tags factors, S&P 500 Enhanced Value Index, S&P 500 Value, value
- Categories
- Factors
How the Liquidity of S&P 500 Investment-Grade Bonds Compares Against Non-S&P 500 Bonds
Liquidity may be defined as the ability to buy or sell a bond within a reasonable period of time and at a reasonable price. A simple way to compare two bonds is through the use of Trade Reporting and Compliance Engine (TRACE) daily volume data. The data represents the daily aggregation of each reported trade…
When Market Timing Is Unusually Pointless
Among the many themes to have emerged in U.S. markets during the first six months of 2017, low volatility in equities and changes in the global interest rate environment—some realized and some anticipated—were particularly important drivers. In a similar vein to our summary on Europe, here are some thoughts on these trends. The potential rewards…