Here’s what we found:
- The public real estate market is uniquely inefficient and a fertile ground for active, factor-based investing.
- Real estate is a diversifying asset class with many benefits, but most investors are under-allocated.
- Public REITs offer complementary exposure while avoiding the drawbacks and barriers to entry of private real estate, but with lower fees and no loss of performance.
Continue reading “5 Ways a Factor Alpha Approach
Can Boost REIT Portfolios”
Part 1 of this article delineates factor-based strategies — fundamental weighting, smart beta, and Factor Alpha — by showing the differences between them. Also covered in Part 1 is a comparison of risk-focused and return-focused factor implementation.
Part 2 covers how risk controls and using Active Share can help determine the alignment between factors and portfolio construction for, as well as the fees you should expect to pay.
Continue reading “They Can’t All Be That Smart
A Due Diligence Framework for Factor Investors (Part 2)”
Not all factor products are smart. This article delineates factor-based strategies — fundamental weighting, smart beta, and Factor Alpha — by showing the differences between them. It also provides a framework for determining the alignment between factors and portfolio construction, as well as the fees you should expect to pay. Continue reading “They Can’t All Be That Smart
A Due Diligence Framework for Factor Investors”
(See Part 1 of this article for background info on the importance of accurately constructing factor signals and how they can impact which stocks get selected into the portfolios.)
Quantitative managers tend to combine individual factors together into themes like Value, Momentum, and Quality. But there are several ways that managers can combine factors into models for stock selection. And models can get very complicated. Continue reading “Factors are Not Commodities
(Part 2 of 2)”
“A man with two watches is never sure [what time it is].”
—Segal’s Law excerpt (see below)
The narrative put forth by “smart beta” products is that factors are becoming an investment commodity. Factors are not commodities — rather, they are unique expressions of investment themes. The uniqueness of one Value strategy from another can lead to very different results, and there are many places that factor-based portfolios can diverge. Continue reading “Factors are Not Commodities
(Part 1 of 2)”
(Part 1 linked here)
Avoid Value Traps via a Quality Overlay
Not every cheap stock outperforms. Even within the cheapest decile of value, there is wide dispersion in underlying stock returns. Certain stocks are cheap for a reason: value traps. Continue reading “Small Cap Equities — Inefficient & Opportune
(Part 2 of 2)”
Small cap equities are generally misunderstood and underappreciated. We believe they present a phenomenal total return opportunity for discerning long-term investors. The construction of common small cap indices and the nuances of the small cap universe favor an active approach. Continue reading “Small Cap Equities — Inefficient & Opportune
(Part 1 of 2)”
A lot of attention has been paid to share repurchases recently, which makes sense given the amount of money involved. As of June 30, 2016, there had been almost $450 billion net transferred from companies to shareholders over the trailing twelve months through repurchase programs, very close to the all-time high in March of 2008. Transferring that much wealth between stakeholders will garner attention, and not all of it is positive. Continue reading “Buyback Bulls & Bears”
Value has broadly been accepted as an investing style, and historically portfolios formed on cheap valuations outperformed expensive portfolios. But value comes in many flavors, and the factors(s) you choose to measure cheapness can determine your long-term success. Continue reading “When a “Value” Company is not a Value”