Commentary

Rising Risk of Stagflation

Trillions of dollars of deficit spending financed by money creation over the past two years caused today’s soaring inflation.

Commentary

Duration Management for the Next 40 Years

Traditional long-only fixed income managers had one of the worst quarters on record in Q1 2022 as higher interest rates left “bottom up” portfolios overweight duration.

Commentary

ESG Is a Preference, Not a Strategy

A portfolio’s return is driven by its investment strategy—a set of decisions that governs allocation and timing of capital among the portfolio’s positions.

Commentary

Inflation Is Here! What Now?

Inflation is rising rapidly, not an unexpected outcome given governments’ pandemic policy response of ballooning deficits and soaring government debt.

Commentary

Did I Miss the Value Turn?

The value rebound that started in September 2020 gave up nearly half its gains by mid-May 2021 as the recovery faltered with the onslaught of the highly contagious Delta variant. But vaccination has proven highly effective, and as the unvaccinated around the world become vaccinated, the prospect of a reinvigorated economy is good. Is now a second chance to rebalance into value stocks?

Commentary

Predicting Equity Returns with Inflation

Rather than predicting what will happen to inflation in the future—a particularly arduous and humbling task—we ask a simple question: What can past inflation dynamics tell us about the equity market’s future returns?

Commentary

Revisiting Tesla’s Addition to the S&P 500: What’s the Cost, Before and After?

We have observed that additions and deletions to the S&P 500 Index follow a dependable pattern: additions underperform and deletions overperform over the subsequent 12-month period.

Commentary

The Fall of the Titans!

The performance of a market-cap-weighted index is driven by a handful of stocks with the largest capitalizations, but these stocks do not remain at the top for long. A smart beta multi-factor strategy is a good solution for investors concerned about the concentration risk of a passive market-cap tracker.

Commentary

The Time Is Now: Climate Transition Investing for US Investors

Climate research informs us that in 2017 anthropogenic global warming reached1.0° C above pre-industrial levels (IPCC, 2018).

Commentary

Factor Timing: Keep It Simple

Factor timing is the ability to add value to an investment strategy by altering the exposure to various factors through time.

Commentary

Big Market Delusion: Electric Vehicles

The “big market delusion” is when all firms in an evolving industry rise together, although as competitors ultimately some will win and some will lose.

Commentary

As Duration Dies, Equities Rise

We compare the current value of bonds versus stocks within the context of the equity risk premium. We couple this analysis with an evaluation of possible Fed policy direction. Our conclusion is that risk assets, such as US equities and corporate bonds, are poised to benefit as are gold and other commodities due to tumbling real yields and dollar weakening.

Commentary

How COVID-19 Vaccines and Brexit Create the Trade of the 2020s

In late 2020, a new kid emerged on the bargain-of-the-decade block. UK stocks, and notably UK value, reached very cheap levels relative to value stocks in other developed economies. Today, UK value remains at remarkably low valuations relative to most of its fundamentals.

Commentary

Reports of Value's Death May Be Greatly Exaggerated

Rob Arnott: “There hasn’t been a better time to be a value investor at any other time in my career. I look back at the tech bubble and I never thought I would see valuations stretched the way they were then. We're back to that, and then some." We invite you to revisit “Reports of Value’s Death Have Been Greatly Exaggerated” now published in the Financial Analysts Journal.

Commentary

Surprise! Factor Betas Don’t Deliver Factor Alphas

By buying or overweighting characteristics-based factor exposure and selling or underweighting beta-based factor exposure, investors can position their portfolios to reap the rewards of factor investing while bearing less risk.