Jun. 27, 2018
Many institutional investors have long viewed China A shares as an inefficient market, suggesting that active strategies such as stock-picking can thrive. However, researching a universe of over 3,500 stocks comes with huge challenges, and may lead investors to question whether factor-based systematic strategies could have worked well with China A shares.
Jun. 26, 2018
When it comes to ESG (environmental, social and governance) investing, conventional wisdom holds that G is the only part that really matters, as a window into overall management quality and providing insights and value for investors. Our analysis suggests this has not been true; that the E and S aspects of ESG did help sort the truly outstanding firms from a group that already shares an array of robust financial traits.
Jun. 25, 2018
For many years now, stock and bond returns have consistently moved in opposite directions. But the timing of selloffs earlier this year in the bond and equity markets combined with inflation concerns and higher interest rates have market participants asking whether the relationship has changed.
Jun. 14, 2018
The recent trend in high-yield market spreads appears to relate more to concern about rising rates than the potential for credit losses. However, investors should be aware that the impressive recent performance of short-dated high yield bonds and floating-rate leveraged loans may be reversed if credit conditions begin to deteriorate.
Jun. 13, 2018
Now that China A shares have partially entered some mainstream MSCI indexes, institutional investors and other stakeholders are raising questions about Chinese constituents’ ESG track records and potential risks from these new exposures in their portfolios.
Jun. 11, 2018
Investors eager to write the obituary of the size premium might want to put down their pens. Small-cap stocks in developed markets outside the U.S. have been on a decade-long run of outpacing their large- and mid-cap counterparts.
Jun. 01, 2018
Investors in the booming U.S. Collateralized Loan Obligation (CLO) market likely need to be aware of the risks: record tight spreads, deteriorating credit quality, and, as our expanded CLO data analytics reveal, selection bias risk.
Today, there are indexes designed to represent the performance of a wide range of investment segments, including market capitalization, geography, industry and, most recently, factors. They also are used as the basis for financial products, such as exchange-traded funds or derivatives. Much like Adam Smith’s “invisible hand,” they play a critical, behind-the-scenes role, reflecting the entire market’s views on valuations, rather than those of any individual or group of individuals.
May. 24, 2018
On Tuesday May 22, Facebook CEO Mark Zuckerberg apologized to EU-based Facebook users for the firm’s failure to sufficiently combat “fake news.” As the EU’s data protection regulation, known as the General Data Protection Regulation (GDPR), kicks in on May 25, Facebook isn’t alone in facing compliance challenges.
May. 23, 2018
Emerging markets may never be the same. On May 31, MSCI will include about 233 China large-cap A shares to the MSCI Emerging Markets Index. Inclusion at a 5% initial weight could lead to approximately USD 22 billion of capital inflows into these stocks. What might investors need to consider as we approach this milestone?