International opportunities to diversify equity allocations are increasing, along with globalization, and as a result, political risk matters now more than ever. More so, the interplay of macroeconomic policymaking and government instability continues to have far-reaching effects in political risk, augmenting the uncertainty that goes hand in hand with allocating to emerging markets. Mindful of…
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After three decades of helping investors make more informed decisions and providing index-based access to diversification, liquidity, and inflation protection – what’s next for this index icon?
Key to evaluating core international equity benchmarks is an understanding of the country exposures offered. Developed and emerging market country classification differences between index providers may lead to notable geographic exposure differences across market segments. One of the most meaningful instances of this involves South Korea, which S&P DJI has classified as a developed market…
While the types of businesses most prominent in the market vary through time, the fact that a small subset of companies’ stocks account for an outsized portion of the stock market is not new. Moreover, research suggests these stocks’ best performance might be in the rearview mirror. The takeaway is that relying on well-established investing…
The S&P ESG Global Macro Index is designed to capture potential opportunities across market conditions through a rules-based, geographically diverse, dynamic mix of ESG equities and fixed income.
There is a subtle but important distinction between factors and factor indices. “Factor” denotes an attribute with which long-term excess returns are thought to be associated. Fama and French, for instance, famously found that small size and cheap valuation were factors in this sense. A number of other variables – prominently including momentum, low volatility,…
Mea culpa: Roughly a month ago I used a dispersion-correlation map to describe how index dynamics can illuminate market movements. In particular, I reported that since high dispersion seems to be a necessary condition for a bear market, and S&P 500 dispersion levels at the end of February were far below those prevailing in past…
Recent selloffs in the equity markets and a significant rise in volatility signal an end to the 11-year bull market (Bye Bye Bull Market: Reaction to Coronavirus). While most broad market domestic equity indices have declined, the performance of the S&P MARC 5% Index (ER) has held up (1.84%). The answer to its resiliency lies…
The critics of passive investing are nothing if not creative. One of their objections to the growth of index funds stems from the putative problem of “common ownership.” The argument is that index funds’ ownership of many of the competitors in most industries encourages or facilitates collusive behavior. “[T]he fear is that by owning chunks…
Readers of this morning’s Wall Street Journal learned (on the front page, no less) that many of the largest investors in the U.S. equity market hold similar portfolios. “The overlap in the top 50 stockholdings between mutual funds and hedge funds…now stands at near-record levels, a study by Bank of America Merrill Lynch found.” An…
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