Key Points: A clear understanding of past market performance can help anticipate the future and make informed investment decisions. The equity market universe is categorized into frontier, emerging, and developed markets based on economic development, size and liquidity, and market accessibility. Technological advancements and the development of exchange-traded funds (ETFs) have made it easier for retail investors to access different … Read More

Capital markets had a challenging year in 2022, facing an inflationary bear market. Traditional investment strategies, such as investing in the NASDAQ and high-yield debt, have generally performed poorly. US Treasuries, which are typically considered a safe haven during stock market volatility, have experienced their worst downturn in over 70 years. Key Points: 2022 was a difficult year for capital … Read More

– Artificial intelligence (AI) is being increasingly used in investing and portfolio management. – AI models can outperform traditional benchmarks like the S&P 500. – The analyzed AI trading model had success in predicting down days and performing well in high-volatility environments. – AI models can avoid trading before big market-moving events. – These findings suggest the vast potential of … Read More

Key Points Investment management involves setting goals, selecting investments, and evaluating results. Portfolio construction is a common source of disappointment as it can lead to a deviation from the expected asset allocation. Benchmark misfit risk is often overlooked but can have a significant impact on portfolio performance. An assessment of the portfolio’s effective exposures can help identify and evaluate benchmark … Read More

Key Points: Crypto asset bubbles follow a predictable trajectory. They often start with a promising new technology that can transform society. Early investors make significant profits, attracting more participants. As more people join, prices rise beyond their fundamental value. Tightening monetary policies eventually lead to a crash. Investors pledge to avoid future bubbles but often succumb again. Patience, skepticism, and … Read More

Key Points: Passive ESG investing is becoming more active, challenging the idea that it is truly passive. ESG indexes have different levels of ESG uplift and tracking error, making it important for investors to evaluate ESG strategies carefully. The integration of ESG data can lead to more concentrated portfolios with lower ESG uplifts and higher active risk. Portfolio construction techniques … Read More

Key Points: Fama and French’s Five-Factor Model Revisited: A closer look at the effectiveness of Fama and French’s five-factor model in explaining returns. Aswath Damodaran on Valuing Young Companies: Insights from Aswath Damodaran on valuing young companies and the importance of being less wrong than others in investing. The ESG Contradiction: The inherent conflict between environmental, social, and governance (ESG) … Read More

There is no trade-off between diversity and investment performance. An extensive review of 56 studies over 28 years found consistent results. 45 of the studies focused on gender diversity, while 11 considered racial and ethnic diversity. Diversity was associated with outperformance in 26 studies, while 15 found no difference in performance. Seven studies associated diversity with underperformance. When it comes … Read More

Key Points: The Bank of Japan (BOJ) has widened the 10-year yield trading range. There is reason to be cautious about the yen’s rally. Global long-term interest rates may exert upward pressure on JGB yields. If global yields spike, the BOJ may have to defend its yield cap. The BOJ has revised its 10-year trading band in the past. The … Read More

The European Central Bank (ECB) has been purchasing corporate debt as part of its corporate sector purchase programme (CSPP). This program has created the expectation among investors of an “ECB put,” where the bank will provide liquidity and restore order to the financial markets in the event of a crisis. The data shows that the CSPP has had a lasting … Read More