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Tag Archives: IIS

Jun 9, 2022

Opportunity to Outperform

It’s been a challenging year for U.S. equities as investors adjust to a new rising rate regime, with inflation concerns at the forefront, coupled with uncertainty around future economic growth. Market commentators have argued that this environment is ideal for stock pickers to shine. This argument is correct, but with a caveat. With the S&P…

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Jun 9, 2022

Looking for Income – The Case for Dividends

For decades, traditional wisdom held that U.S. investors seeking stable income should turn to bonds. However, after more than a third of a century of declining yields, the current market environment may require a less traditional approach. Until recently, U.S. Treasuries have been a vehicle of choice for income-seeking investors: they provide a fixed stream…

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Jun 3, 2022

These Go to 11: Diversification with S&P 500 Sectors

Many strategies (including passive ones) hold large allocations to Information Technology. A “barbell” approach can mitigate risk from high exposure to one sector by pairing it with another. Do you remember sending your first email? For many, it was likely around the mid-1990s when a “googol” was still 10^100 rather than a verb and the…

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May 26, 2022

Value Vulnerabilities

Value has experienced a dramatic reversal in 2022, with the S&P 500® Value outperforming the S&P 500 Growth by 20% on a YTD basis as of May 25, 2022. Although one might expect this outperformance to be a boon for value managers, the data may indicate otherwise. A majority of active large-cap value managers outperformed…

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May 9, 2022

Parsing Persistence

Similar to active managers, who attempt to identify stocks with above-average performance, investors who use active funds aim to identify managers who will outperform their peers. Our SPIVA® Scorecards consistently show that most active managers underperform most of the time. But not all funds, and not all the time. How might such outperforming funds be…

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Mar 30, 2022

Sizing Sectors

After peaks in S&P 500® concentration, the S&P 500 Equal Weight Index has tended to outperform, suggesting that there is a relationship between changes in concentration and the relative performance of equal weighting. But, does this relationship also occur at the sector level? Using the historical adjusted HHI (Herfindahl-Hirschman Index), we’ve previously established that concentration…

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Mar 22, 2022

Holding Period Returns

What is the appropriate observational period for evaluating an investment strategy? This question is important, because different observational periods can produce different conclusions. For example, for the first 11 weeks of 2022, one of our better-performing factor indices has been the S&P 500® Low Volatility Index. Through March 18, 2022, Low Vol had declined 4.7%,…

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Mar 18, 2022

Canadian Equities Offer Some Solace amid World Turmoil

Despite global geopolitical tensions, Canadian equities, in contrast to U.S. equities, seem to be faring well. Since its rebalance on Dec. 17, 2021, the S&P/TSX Composite gained 5.7% (through March 17, 2022). It was no surprise that the S&P/TSX Composite Low Volatility Index lagged—what was surprising was that it lagged by 1.3%, rising 4.4% over…

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Mar 14, 2022

Contemplating Concentration

After the exceptional performance of large-cap stocks in recent years, concentration concerns naturally come to mind. There are many ways to measure concentration. A simple method is to add up the weight of the top names, but the drawback with this approach is it doesn’t incorporate all the constituents in an index. The Herfindahl-Hirschman Index…

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Mar 8, 2022

No Easy Answer: Sector and Factor Responses to U.S. Rate Hikes

Although higher rates are generally seen as negative for risk assets, the initial stages of a monetary tightening cycle have not been disastrous for the U.S. stock market historically. However, while the overall market may muddle through just fine, the same may not be true for the different sectors and factors that compose a broad…

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