Tag Archives: passive investing

Apr 14, 2021

SPIVA Latin America Year-End 2020 Scorecard: Active Managers Missed an Opportunity

The recently published SPIVA® Latin America Year-End 2020 Scorecard shows that the volatile environment of 2020, though potentially favorable for high-conviction active managers, did not necessarily translate into success for active managers. SPIVA scorecards measure the performance of active funds against an appropriate benchmark. For Latin America, S&P Dow Jones Indices began publishing the scorecard…

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Mar 30, 2021

Opportunity Does Not Equal Attainment

We’ve previously argued that most managers should prefer above-average correlation, because the incremental volatility a manager accepts to pursue an active strategy will be lower when correlations are high. In addition, active managers should prefer above-average dispersion, because stock selection skill is worth more when dispersion is high. Both correlation and dispersion rose in 2020….

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Mar 30, 2021

The Shift to Passive in India

In 2020, the Indian ETF market continued to expand, finishing the year with ~USD 37 billion in assets spread across 99 listings. This represents a year-over-year increase of USD 23.3 billion, or 171%, placing India as the ETF market in the Asia-Pacific region with the highest growth on a percentage basis in 2020.1 Within the…

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Aug 6, 2020

Getting Up to Speed with the Essentials of Index Construction

Why choose index investing? Yes, the merits of diversification and low cost are usually factored in, though one critical benefit that many do not realize is the transparency that is provided in the methodology of an independent index provider. To understand what goes into the design and methodology of an index, it’s important to note…

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Jul 22, 2020

Active Managers’ Outperformance in Brazilian Bond Funds – Skill or Price Distortion?

There were impressive results for active managers in the Brazil Corporate Bond Funds category, with 93.6% of them beating the benchmark in March 2020 and 88.2% Q1 2020. However, were these performance results due to true skill? This outperformance may be related to a market distortion. On the one hand, Brazil’s corporate bond funds experienced…

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Jul 21, 2020

Education Is the Armor That Can Protect You from Your Stomach

I had the privilege to sit down, albeit virtually, with Larry Swedroe, Chief Research Officer at Buckingham Wealth Partners, after he participated in our webinar for financial advisors, “How Has COVID-19 Affected Active vs. Passive Performance?” to dig deeper into his thoughts on SPIVA® results during the first four months of 2020. Brent Kopp (BK)…

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Jul 15, 2020

Did Latin American Active Managers Outperform in This Tumultuous Time?

Low volatility and dispersion make it harder for active managers to add value. In other words, high volatility and high dispersion environments are expected to favor active managers to demonstrate their skill. In this aspect, March 2020 offered an opportunity to active managers[1] across the world, including in Latin American equity markets. High dispersion and…

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Jul 8, 2020

Core and Satellite – The Best of Both Worlds

The contentious debate of active versus passive is perpetual. Over the past 15 years, SPIVA® Scorecard results have reflected on the trends of active fund management vis a vis benchmarks, wherein statistics tilt the balance in favor of indexing. This recurring feature of benchmark outperformance is contributing to the adoption and growth of the passive…

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Jul 7, 2020

Viewing 20 Years of Indexed Core Assets Growth through a SPIVA® Lens

In 1973, Princeton professor Burton Malkiel wrote the book, A Random Walk Down Wall Street, laying out a case against the mutual funds of the time as persistently underperforming market indices. Malkiel recommended[i] that the New York Stock Exchange create a fund that simply bought and held stock in the companies comprising the indices. Somewhat…

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Jun 22, 2020

The Progression of Passive

The evolution of indexing is one of the most noteworthy trends in modern financial history. The rise of passive investing is the consequence of shortfalls in active performance, as regular readers of our SPIVA reports will recognize. Our recent annual Survey of Indexed Assets shows a surge in S&P 500 indexed assets to $4.6 trillion…

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