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Tag Archives: S&P 500

Sep 27, 2021

Mid- and Small-Cap Fund Managers Lost Their Advantage – SPIVA U.S. Mid-Year 2021 Scorecard

The SPIVA® U.S. Mid-Year Scorecard continues to show that active funds’ strong absolute returns do not always translate into relative success compared with their benchmarks. In 15 out of 18 categories of domestic equity funds, the majority of actively managed funds underperformed their benchmarks. Over the 12-month period ending June 30, 2021, 58% of large-cap…

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Sep 23, 2021

The Importance of Order

We all know that stock market returns vary substantially over time. For example, the S&P 500®’s performance between 1981 and 2020 ranged from -37% (2008) to +38% (1995). The market’s compound annual return for this period was 11.5%. Investors, however, live with actual portfolio values, not abstract rates of return. Obviously, and other things equal,…

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Jul 27, 2021

Strength of Savings

In the 20 years ending in 2020, 94% of all large-cap U.S. managers lagged the S&P 500®. Mid- and small-cap results were almost equally disappointing. A notable consequence of these shortfalls in active performance has been the rise in passive investing, one of the most significant trends in modern financial history. Our recent Annual Survey…

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Jul 27, 2021

A Hypothetical Look at 35 Years of Indexes that “Buy” SPX Options

35 Years of Hedging Indices Below are three Cboe S&P benchmark indices that theoretically “buy “SPX put options as part of their index methodology and have 35 years of back-tested performance history going back to June 30, 1986.  As shown below, the three options indices were introduced in either 2008 or 2015, and the data…

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Jul 26, 2021

A Hypothetical Look at 35 Years with Indices That Use SPX Index Options

Four Option Benchmark Indices In order to assess how hypothetical options strategies performed in various market regimes over the past 35 years, investors use some or all of these four key benchmark indices that sell S&P 500 options as part of the their index methodology and that have histories going back to June 30, 1986….

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Jul 22, 2021

The S&P 500 and DJIA: Divergent Paths to Similar Results

The S&P 500® and the Dow Jones Industrial Average® (DJIA) are two of the best known and most used indices in the world. They are both designed to represent U.S. large-cap companies. As we detailed in a recent paper, the S&P 500 and DJIA have similar long-term risk/return profiles. As of April 30, 2021, the…

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Jun 9, 2021

Riding the Value Wave

U.S. equity markets seemed to undergo a fundamental change of direction in September of last year. Exhibit 1 illustrates the shift; our growth indices, which had outperformed value handily through the end of August, have lagged ever since. The spreads between growth and value are even greater when we compute them using our Pure Growth…

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Jun 8, 2021

The Potential Value of U.S. Equity Allocation to Chinese Investors

The Chinese financial market has continued to evolve and mature over the past decade. More and more domestic Chinese investors are starting to take note of investment opportunities from global markets. What are the potential benefits of allocating globally for Chinese investors? In this blog, we will use the CSI 300 Index as a proxy…

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May 12, 2021

Equity: Diversity and Inclusion

We can think of an active equity portfolio as a combination of a benchmark (the S&P 500®, for example) and a set of active bets that measure the portfolio’s deviation from the benchmark. The relative size of the active bets is sometimes called “active share,” and is a convenient way to judge a manager’s aggressiveness….

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Apr 29, 2021

Woodstock for Capitalists

Berkshire Hathaway is scheduled to hold its annual shareholders’ meeting this Saturday, May 1. This is the second consecutive year in which the meeting will be virtual; in 2019, attendance was nearly 40,000, which makes social distancing somewhat difficult. We noted two years ago that Berkshire’s investment performance, though formidable over the long run, had…

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