On February 19th, 2020, the S&P 500 hit an all-time high of 3,386.15. Thirty-three days later, on March 23, the S&P 500 closed at 2,232.40, a 34% collapse. Between February and April, 5.3 trillion dollars of the S&P 500’s market cap was wiped out from Covid-19 Pandemic. Fast forward to the end of May, where … Read more
The net payment cost index assumes that the insured person will die at the end of a specified period, such as 20 years. Calculation of the net payment cost index includes the following steps: Calculate the future value of an annuity due of an amount equal to the premium, compounded at a 5% discount rate … Read more
Most major equity indices saw a risk off week. S & P 500 posted mid week gains that evaporated by Friday. Federal Reserves announces low rate environment until 2023. In the US, jobless claims dropped by 24k to 860,000. Benchmark Treasuries yields increase on the week. Dollar indices down on week but bullish momentum still … Read more
Active equity investing may reflect a variety of ideas about profitable investment opportunities. However, with regard to how these investment ideas are implemented—for example, how securities are selected—active strategies can be divided into two broad categories: fundamental and quantitative. Fundamental research forms the basis of the fundamental approach to investing. Although it can be organized … Read more
The construction of an index starts with the method of identifying stocks to include; this method can be exhaustive (every stock in a defined universe; e.g., the CRSP U.S. Total Market Index) or selective (a subset of stocks within a universe; e.g., the S&P 500 Index or the Dow Jones Industrial Average [DJIA]). Methods of index-weighting include (1) market-cap … Read more
S & P 500 struggles to go anywhere this week, however we do see bullish momentum in several global equity indices. August CPI levels in the US seem to have recovered to pre-pandemic levels. Initial claims higher than anticipated at 884k but stays below 1 million for the second week in a row. Federal budget … Read more
S & P 500 ends week in selloff, while FTSE 100 continues its nearly month long decline. Nikkei and DAX end relatively flat. US initial claims dropped to 880k, with 1.4 million jobs added back and unemployment falling to 8.4%. Benchmark Treasury yields flatten again. US Dollar value back to devaluation. US real estate loan … Read more
S & P 500 goes on a renewed tear this week, while other global equity indices show more of a mixed a bag. The FTSE 100 in particular has seen 2 weeks of continued declines. In the US, initial jobless claims stay just above 1 million claims for the week, and news of layoffs were … Read more
Investment Philosophy The entire investment process should be driven by a succinct and precise investment philosophy. Some managers believe that markets are very efficient and that active management will underperform after considering all related costs. Therefore, those managers will execute passive strategies and attempt to earn risk premiums instead. To earn risk premiums, passive strategies … Read more
Style Analysis Style analysis examines the manager’s risk exposures in relation to an appropriate benchmark and the changes in those exposures over time. The risk exposures allow for the classification of managers by style for selection purposes and to perform returns-based style analysis (RBSA) and holdings-based style analysis (HBSA). Monitoring the RBSA and HBSA output … Read more
Evaluating an investment manager is a complex and detailed process that encompasses a great deal more than analyzing investment returns. The investigation and analysis in support of an investment action, decision, or recommendation is called due diligence. Manager Selection Process Typically, a search starts with a benchmark that represents the manager’s role within the portfolio. … Read more