Tag Archives: interest rates
Paying Dividends: Measuring Rising Income against Declining Risks in the iBoxx Fixed Income Indices
With the ZIRP world1 firmly in the rear view, the “income” in fixed income is back. As yields collapsed to record lows, income-starved investors sought alternative sources of income such as dividend strategies, which attracted record flows in related products throughout 2022. Now, with investment grade bond yields hitting as high as 6%, bonds are…
- Categories Fixed Income
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Examining Equal Weight
In this tumultuous market characterized by Fed rate hikes, elevated inflation and a strong dollar, mega-cap growth companies have suffered heavy losses, paced by recent “Big Tech” earnings disappointments from Meta, Microsoft, Alphabet, Amazon and others. The S&P 500® Top 50 declined by 19% over the past 12 months, underperforming the S&P 500 by 5%….
- Categories Equities
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- Equities
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Watch Your Weighting Scheme
2022 has witnessed a recalibration across financial markets, as investors have digested the impact of higher interest rates amid elevated inflation. Despite bouts of optimism that the U.S. Federal Reserve would take a more dovish stance, and better-than-expected corporate earnings, Exhibit 1 shows that the vast majority of large-, mid- and small-cap indices declined through…
Taking Higher Interest Rates in STRIDE
When it rains, it pours, and there’s no lack of bad news in 2022. The equity market is in solid bear territory, with the S&P 500® down 22% YTD. Inflation is high, and the Federal Reserve has aggressively hiked interest rates in recent months. The latest cycle of rate increases has happened faster than at…
Infrastructure to Strengthen a Portfolio in Volatile Times
Key Observations: Infrastructure owners and operators provide real asset exposure in inflationary environments Opportunities for yield on infrastructure continue to be relatively strong Infrastructure companies have delivered consistent operating margins over time How can investors power through the rising inflation, low real yields and sluggish profits in today’s volatile markets? The answer may be pure-play…
Simplicity Yields Outperformance: The S&P 500 Low Volatility High Dividend Index
Last week, the S&P 500® officially entered a bear market, dropping more than 20% from its record close in January. However, not all equity indices suffered comparable losses, and one such example is the S&P 500 Low Volatility High Dividend Index. In fact, this index has outperformed by a wide margin so far in 2022….
Rising Rate Reflections
The Federal Open Market Committee voted to raise the Federal Funds rate by 25 bps on March 16, 2022. This move was well telegraphed and not at all surprising—but that doesn’t mean that we won’t hear concerns about how rising rates will impact equity returns. Finance theory teaches us that, other things equal, rising interest…
- Categories Fixed Income, S&P 500 & DJIA
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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…
- Categories Factors, S&P 500 & DJIA
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Rising Rates’ Repercussions
Which of the figures in Exhibit 1 belong together? Even if puzzles aren’t your strong suit, it’s not hard to observe that A and C are similar, as are B and D. A and C are not like B and D. Exhibit 1’s puzzle is rooted in recent economic news, specifically in the consensus view…
- Categories Factors, S&P 500 & DJIA
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The S&P 500 in the Years of Rate Hikes
Overnight rates in the U.S. are one of two major levers that the Federal Open Market Committee (FOMC) can pull to change the course of inflation and employment, the other being quantitative easing. At present, the market expects the Fed to move both levers in the near future: hiking rates and starting to wind down…
- Categories S&P 500 & DJIA
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