Articles & Insights
Investment Executive: Focus on Products  |  01 August 2017

Active managers

As financial advisors pour billions of dollars into index-based ETFs, the use of active managers in portfolio construction increasingly comes under question. Read more >

Investment Executive: Focus on Products  |  15 June 2017

Forecasting market returns

There is an adage from Wall Street’s early days: “Valuation helps define risk, but it doesn’t help with timing.” Brokers learned eons ago that simply because a stock is cheap or expensive says nothing about its short-term price direction. Read more >

Investment Executive: Focus on Products  |  15 February 2017

Curb your enthusiasm

Several academic studies have determined that investors’ future return expectations are heavily influenced by recent performance. With the Canadian stock market delivering an exceptional 21.2% in 2016 and the U.S. market up 17.4% annually over the past three years, many investors are likely ratcheting up their return expectations. Read more >

Investment Executive: Focus on Products  |  15 January 2017

Not dead yet

In the U.S., actively managed domestic equity mutual funds have suffered nine years of consecutive outflows as investors have poured money into index domestic equity mutual funds and ETFs. The contrast is glaring – from 2007-15, US$835 billion exited actively managed domestic equity mutual funds while $1.2 trillion flooded into index domestic equity mutual funds and ETFs. Read more >

Investment Executive: Focus on Products  |  01 November 2016

Benefits of concentration

Proponents of actively managed, concentrated portfolios will be heartened by the results of a study published recently in the Financial Analyst’s Journal.

The authors, Eitan Goldman, Zhenzhen Sun and Xiyu (Thomas) Zhou, analyzed the returns and portfolio concentration of 3,895 actively managed U.S. equity mutual funds from 1990-2012. They found that funds with a higher level of portfolio concentration within sectors display better performance. Read more >

Investment Executive: Focus on Products  |  15 May 2016

Sell in May and go away

Calendar anomalies have been studied by financial academics and practitioners for decades. These irregular stock return patterns include the January Effect, the Holiday Effect, the Turn of the Month Effect and the weekend Effect. Every spring, one such anomaly – Sell in May and Go Away, also known as the Halloween Effect – is a recurring topic in the financial press.  Read more >

Investment Executive: Focus on Products  |  01 April 2016

Impact of negative rates

A tour of eurozone government bond exchange-traded funds (ETFs) provides a glimpse of the negative interest rate challenge that may confront Canadian investors within the next few years. As of March 9, iShares Euro Government Bond Zero- to One- Year UCITS ETF, managed by BlackRock Advisors (U.K.) Ltd., sported a negative yield to maturity (YTM) of minus 0.25%, while the one- to three-year and the three- to five-year versions had YTMs of minus 0.8% and minus 0.5%, respectively. Read more >

Investment Executive: Focus on Products  |  15 February 2016

Risk and reward

The current yield to maturity (YTM) of a default-free government bond is a reasonable estimate of its future expected return. Studies have found that the correlation between the beginning YTM and the subsequent realized return on 10-year US treasuries is in the 0.9 range. As interest rates change, the gain or loss on reinvestment income is offset by roughly the loss or gain on the principal value. Unfortunately, Canadian federal government bonds hit record lows in mid-January.  Read more >

Investment Executive: Focus on Products  |  15 January 2016

Beating the market

Since the 1960’s, financial theorists have been building models that explain stock returns as a function of their risk exposure. Originally, the capital-asset pricing model focused on a single factor – market exposure – as the driver of returns. By the 1970s, however, financial theorists were proposing an array of factors – fundamental, macroeconomic and statistical – as the determinants of expected returns. Read more >