The Opportunity Cost of Active Management

Investors typically flock to active funds to pass on the stock-picking decision making to a seasoned fund manager, with the hope that the fund manager’s experience and stock-picking capabilities will enable the investor’s portfolio to grow at a faster pace than that set by the benchmark. By using this approach, investors are able to circumvent Read more […]

Carlos Urzúa Resignation and Low Volatility’s Response

Mexico’s Finance Minister, Carlos Urzúa, abruptly resigned on July 9, 2019 over policy disagreements with the current government.[1] Market participants reacted negatively, generating volatility in the Mexican peso’s exchange rate, which fell 2.3% right after the announcement,[2] and the country’s equity market, and bringing a trial by fire for the S&P/BMV IPC Risk Weighted Index Read more […]

Palladium – All That Glitters is Not Gold

Much has been made during recent months of the renewed interest investors have shown in gold on the back of growing financial market turbulence, a plethora of geopolitical flashpoints, and a string of economic releases that have fallen short of expectations. But gold has not been the shiniest precious metal this year; back in January, Read more […]

Using Credit Ratios to Build Defensive Corporate Bond Portfolios

For corporate bond managers, credit analysis is a key step in the investment process, one that lays the foundation for their credit outlook and investment strategies. Credit analysis assesses bond issuers’ creditworthiness and evaluates their ability to make timely interest and principal payments. Credit analysis is critical in helping bond managers assess the state of Read more […]

The Importance of Being Large-Cap

The performance of U.S. equity factors during Q2 was lackluster, with most underperforming the S&P 500, as seen in Exhibit 1.  While Minimum Volatility and Low Volatility were notable exceptions, Value, Quality, High Beta, and Momentum all lagged the benchmark – in large part because of their tilt toward smaller companies.  Since most factor indices Read more […]

Understanding the ESG Consequences of Factor-Based Investing: Part 1

    “Sustainable investing must go mainstream. Fortunately, the momentum is growing.” – Mark Carney Mark Carney’s statement underpins the sentiment of the investment community, where environmental, social, and governance (ESG) considerations have entered the forefront of investors’ priorities. Whether factor indices have ESG principles integrated or not, understanding a factor’s influence on ESG characteristics, Read more […]

S&P MARC 5% (ER) Index Q2 2019 Performance: Bitten by the Gold Bug

The second quarter of 2019 reinforced the upside potential of S&P MARC 5% Excess Return (ER) Index diversification, which compliments traditional risk management benefits. With the equities and fixed income components having good, but not stellar, Q2 performance, we have to look to gold to understand the driver of the S&P MARC 5% (ER) Index’s Read more […]

Commodities Performance Highlights – June 2019

Commodities markets resumed their upward trajectory in June. The S&P GSCI was up 4.4% for the month and up 13.3% YTD. The Dow Jones Commodity Index (DJCI) was up 3.1% in June and up 6.9% YTD, reflecting its lower energy weighting. A recovery in petroleum prices and an impressive rally in gold were the main Read more […]

Managing Geographical Revenue Exposure in the Australian Equities Market

The S&P/ASX 200, widely considered a performance barometer for the Australian equities market, comprises 200 of the most liquid and highest market capitalization stocks listed on the Australian Securities Exchange (ASX). Nevertheless, the performance of this index is not solely influenced by Australian economic activities, but also by global economic conditions, depending on the individual Read more […]