Equity markets have changed considerably over the past 10 years, reflecting the growth of stocks and sectors in each market. While this growth has led to increased concentration in most of the world’s largest equity markets, Australia is a notable exception, as diversification has improved both in terms of stock concentration and along sector lines….
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As Asian investors consider potential shifts in inflation and macro trends, could a closer look at U.S. markets through the lens of the S&P 500 help them identify potential opportunities abroad? Hamish Preston and Jason Ye of S&P DJI join Erik Norland of CME Group to explore the potential risk/return and diversification benefits of U.S….
How does index design influence sector diversification? Look under the hood of the S&P BSE SENSEX 50 Index with S&P DJI’s Ved Malla.
In our previous blog (The Importance of Sector Diversification in a Yield-Focused Strategy – Part I), we highlighted that sector biases in an unconstrained yield strategy could detract from portfolio returns. In this blog, we will show that addressing the sector concentration issue can improve risk-adjusted returns. We constructed three sector-diversified portfolios—the dividend yield portfolio,…
Diversification is undoubtedly a central tenet of investing. Many studies   have shown that over the long-term investment horizon, maintaining a diversified portfolio can potentially reduce overall risk without compromising expected returns. As such, most market participants strive to form diversified portfolios in order to achieve their desired investment outcomes. There are many ways…
Different sectors within the same country can perform differently. Not all sectors of the economy perform well during a bull market and vice versa. Hence, an investment fund heavily focused on one or two sectors could be more volatile and susceptible to a single market incident or regulatory measure. In addition, no particular sector can…