Investors Suffer with Too Many ETF’s —-Contributor Tim Fortier
Unlimited choices produce genuine suffering according to Dr. Barry Schwartz. In his book Paradox of Choice – Can Having Too Many Choices Make You Unhappy, Dr. Schwartz argues that more choices make us more uncertain about our choices. And this leads to increased anxiety and suffering. Investing already produces anxiety for many investors. So adding more choices without a solution for managing them seems to make the anxiety grow and …
Are Elevated Correlation the New Normal? By Sam Stovall S&P Equity Research
Sectors within the S&P 500 have exhibited a similar trend. Summary Points The correlations of many assets with domestic stocks have increased during the past 30 years. The availability of mutual funds and Exchange Traded Funds has contributed to this trend. Correlations of the S&P 500 with all 10 of its component sectors are at or near their highest points in 20 years. Over the past 30 years, the variability …
As Stock and Sector Correlation Hits Fresh 20 Year Highs, Here is who is Benefiting. Submitted by Tyler Durden
There was a time when being short was a bad idea. Not anymore. As David Kostin’ summarizes in his latest weekly chart packet, the level of 3 month S&P and sector correlation is now at a 20 year high, an environment which never leads to good outcomes for long-only whales, and which has led to sizable outperformance for hedge funds due to their recent loading up on short positions. To …
The Power of Low-Correlation Investing –By Marc.D. Stern
Ă‚Â In Brief Mixing Asset Classes Over the Long Term No one can predict market performance over any time period, short or long, but the study of correlations shows that, over time, different asset types have not performed in sync with the stock market. An investor who holds a portfolio diversified with low-correlating assets has the opportunity to benefit from returns with less risk. Balancing won’t always produce a gain, …
Absolute Return: winners and losers
With absolute return portfolios growing in portfolio, how can you separate the good from the ugly? Top managers share their experience over the past year with Citywire Global. Marta Campello, Abante Asesores Investors ask for positive returns and low volatility in any market conditions. Since we have experienced a prolonged spell of volatility they are looking for shelter in so-called absolute return funds, but they do not show a clear …
9 Things We Learned About ETF’s in 2011 Transcript from video of Scott Burns
Taking a look back at 2011 in ETFs. Hi there! I’m Scott Burns–Morningstar’s director of ETF, closed-end fund, and alternatives research–here to talk a little bit about what we learned in 2011 in the ETF space. I think the first thing that we learned and saw is that ETF adoption continues unabated. Flows remain generally positive in every month, and we continued to see more and more adoption and more …
Cliff Asness: A hedge fund genius goes retail, by Shawn Tully
He already manages billions for elite investors. Now Cliff Asness believes he’s perfected a better way for regular folks to play the market, and he’s using that formula to build a mutual fund empire. At his home in Greenwich, Conn., Asness displays an admiration for Winston Churchill. His firm, AQR Capital, runs $42 billion. FORTUNE — Even among hedge fund brainiacs, Cliff Asness qualifies as a high achiever. In just …
Volatility prompts growing use of ETFs, says survey by Chris Flood
Ă‚Â High levels of volatility across financial markets are forcing US financial advisers to pay more attention to risk management, leading a majority to adopt blended strategies employing passive exchange traded funds and active investments, according to Invesco. Invesco surveyed 206 financial advisory firms and found some advisers using basic strategies, such as investing more conservatively or rebalancing portfolios frequently, to minimise risk. Employing a blend of active investments and passive …
JP Morgan Woos Clients with Simplicity By Jessica Toonkel
Ă‚Â Tue, Dec 13 2011 By Jessica Toonkel NEW YORK (Reuters) – JP Morgan Chase & Co.’s fund division is banking on the idea that if it can help advisers and investors understand what’s going on in the markets, they will buy its funds. Stock market volatility, the European debt crisis and uncertain macro-economic trends have left investors and some advisers uncertain about where to put their money. “I don’t think …
Underperformance Rife Among Active Fund Managers By Chris Flood Writing for the FT
Almost three-quarters of actively managed US large-cap funds failed to outperform the S&P 500 over the past three years, according to an analysis by Standard & Poor’s. S&P has constructed a scorecard that summarizes the performance of active managers in different categories across one, three and five years compared with a relevant benchmark. The study calculated average returns for each fund group weighted by the size of each fund constituent. …