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 Read more […]
S&P Dow Jones Indices produces a semi-annual report comparing the performance of active managers to their target indices or benchmarks. The report is referred to as the SPIVA Scorecard (SPIVA standing for S&P Indices Versus Active Managers). So, what does the SPIVA Scorecard tell us about performance? As illustrated in the table above, for any regional equity class Read more […]
Tomorrow, Warren Buffett and 30,000 of his closest friends will gather in Omaha for Berkshire Hathaway’s annual meeting. The loyalty of long-term Berkshire shareholders is the stuff of legend, as is the investment performance that produced it. $100 invested in Berkshire stock at the end of 1968 would have grown to more than $850,000 by Read more […]
Here is a 22-year history of a (hypothetical) actively-managed portfolio and its benchmark: Results have been decisively mediocre. The portfolio outperformed in only five years out of 22, for a hit rate of 22.7%. Its cumulative return (68.2%) lagged that of the benchmark (74.0%), and its volatility was higher (4.79% vs. 4.25%). The manager’s marketing department Read more […]
This morning brought a report that “retail investors have returned to Wall Street, pouring money into mutual funds focused on US equities for the first time since early 2015, according to data from TrimTabs Investment Research…. ‘Maybe people think, in times of higher volatility, active managers will do a better job,’ Winston Chua, an analyst Read more […]
As a leading index provider with clients and customers around the world, S&P Dow Jones Indices regularly launches new indices. Just like our children, we try to love them all equally. Every now and then, however, a particularly exciting new index comes along. Last week, our global equities group launched a potentially important new benchmark Read more […]
Yesterday’s decline in the U.S. and global stock markets is striking not simply because of its magnitude but also because it represents a radical reversal of factor returns from the first three quarters of 2018. Readers of our quarterly factor dashboard will recognize this graph, which shows the total return of the S&P 500 and Read more […]
Our most recent Persistence Scorecard shows that relatively few funds can consistently stay at the top. Out of the 557 domestic equity funds that were in the top quartile as of March 2016, only 2.33% managed to stay in the top quartile at the end of March 2018. That means out of the 2,228 domestic Read more […]
Suppose you, as a hypothetical financial advisor, encounter a hypothetical marketer who presents the following hypothetical performance data: Last Year Trailing 3 Years Trailing 5 Years Trailing 10 Years Portfolio 25.0% 11.9% 16.0% 8.8% Benchmark 21.8% 11.4% 15.8% 8.5% Not only did the portfolio beat its benchmark handily in 2017, says our marketer, but it Read more […]
Our colleagues at S&P Global Market Intelligence recently completed a paper analyzing the impact of exchange-traded funds on stock-level pricing. Their work found that “…the impact of ETF trading is transient and of only a modest magnitude under even extreme assumptions” (my italics). This conclusion is a rebuttal to critics who believe that the growth Read more […]
