Craig Lazzara is Managing Director and Global Head of Index Investment Strategy for S&P Dow Jones Indices (S&P DJI). The index investment strategy team provides research and commentary on the entire S&P Dow Jones Indices’ product set, including U.S. and global equities, commodities, fixed income, and economic indices. Craig previously served as product manager for S&P Indices’ U.S. equity and real estate indices. These include the S&P 500 and the S&P CoreLogic Case-Shiller Home Price Indices, two of the most widely tracked benchmarks in the world.
Prior to joining S&P Indices in 2009, Craig was a managing director of Abacus Analytics, a quantitative consulting firm serving the brokerage and investment management communities. He previously directed marketing and client service for ETF Advisors and Salomon Smith Barney’s Global Equity Index Group, as well as for the Equity Portfolio Analysis group at Salomon Brothers. Earlier, Craig served as chief investment officer of Centurion Capital Management and Vantage Global Advisors, as a managing director of TSA Capital Management, and as a vice president and portfolio manager for Mellon Bank and T. Rowe Price Associates.
A Chartered Financial Analyst, Craig is a graduate of Princeton University and Harvard Business School.Suppose you, as a hypothetical financial advisor, encounter a hypothetical marketer who presents the following hypothetical performance data: Last Year Trailing 3 Years Trailing 5 Years Trailing 10 Years Portfolio 25.0% 11.9% 16.0% 8.8% Benchmark 21.8% 11.4% 15.8% 8.5% Not only did the portfolio beat its benchmark handily in 2017, says our marketer, but Read more […]
Our colleagues at S&P Global Market Intelligence recently completed a paper analyzing the impact of exchange-traded funds on stock-level pricing. Their work found that “…the impact of ETF trading is transient and of only a modest magnitude under even extreme assumptions” (my italics). This conclusion is a rebuttal to critics who believe that the growth Read more […]
Market observers have noted that the S&P 500’s performance so far this year has been dominated by a small number of technology stocks. This observation is certainly correct, although it’s fair to question the relevance of a statistic based on fewer than two months’ data. What’s more important is to bear in mind that this Read more […]
Earlier this week, the Wall Street Journal featured a long article arguing that Morningstar’s star ratings for mutual funds were a “mirage.” Since these ratings exert a powerful influence over fund flows, their usefulness is obviously of keen interest to investors. To its credit, Morningstar, although arguing that its ratings are a “worthwhile starting point,” Read more […]
Last week, readers of the Financial Times were regaled by suggestions that capitalization-weighted index funds were “hugely biased,” “undiversified,” and “too trusting of the market’s judgment on a handful of very large stocks.” Criticisms of cap weighting aren’t new, of course, and at least in the near term seem not to have been very effective Read more […]
This weekend’s Financial Times brought John Authers’ provocative article on the frequency of financial crises. Along the way, John gives us some excellent advice: “We should all work on the assumption that we do not know what will happen next.” John’s view of crisis prediction applies equally to the quotidian work of investment management. Since we don’t Read more […]
This morning’s Wall Street Journal informs us that the growth of exchange-traded funds has “propelled” this year’s surge in equity prices. “Booming demand for passive investments is making exchange-traded funds an increasingly crucial driver of share prices….Surging demand for ETFs this year has to an unprecedented extent helped fuel the latest leg higher for the Read more […]
This morning’s Wall Street Journal described how “a $1.4 billion ETF gold rush” supposedly has disturbed the pricing of mining stocks around the world. $1.4 billion turns out to be the incremental cash flow into a single exchange-traded fund designed to track an index of the gold mining industry, including some relatively small-capitalization companies. These Read more […]
This morning’s Wall Street Journal reported, rather breathlessly, that “U.S. bond yields are topping a key measure of the dividends that large U.S. companies pay—a shift that has broad implications for investors….” The headline was triggered by the observation that the 2.50% “yield on the 10-year U.S. Treasury note…exceeded the 1.91% dividend yield on the Read more […]
Measuring the away-from-benchmark exposures of active portfolios (or “smart beta” indices) is not inherently complicated. To what degree, for example, is a portfolio cheaper than its benchmark, or more tilted toward high quality stocks? Practitioners typically approach the question in one of several ways: Calculating weighted average differences – e.g., the yield on my portfolio is Read more […]