Expensive ETFs —
the P/E Under the Hood

Categories Investing, OSAM Research

“Trump Bump Boosts ‘Smart Beta’ Funds”   — WSJ, Feb. 5, 20171

The chart below helps answer these 2 questions: “Do I really want to rely on a tweet to drive my investing success?” and “Am I (and/or are my clients) in an ETF that selects its stocks for their scalability rather than their potential to generate alpha?”2 Additionally, this article asks “How does a contrarian thesis of ‘building resilient, inexpensive portfolios by selecting quality, high-yielding stocks’ — or something along those multi-thematic lines — look under the lens of P/E?”3 Continue reading “Expensive ETFs —
the P/E Under the Hood”

Factors are Not Commodities
(Part 2 of 2)

Categories Author: Chris Meredith, Investing

(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.)

Alpha Signals

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)”

Factors are Not Commodities
(Part 1 of 2)

Categories Author: Chris Meredith, Investing

“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)”

3 More Considerations for Equity Income Investors

Categories Author: Ehren Stanhope, Income, Investing

In Part 1, I discussed the massive flows to dividend-paying stocks in recent years, dividend yield’s poor performance1 as an investment factor, and notes of caution for the upcoming rising rate environment. Here are 3 additional considerations and suggestions that address the vehicles most commonly used to access the dividend theme, the popularity of dividend growth, and the importance of valuation in making dividend investments. Continue reading “3 More Considerations for Equity Income Investors”

Equity Income — 2 (of 5) Key Considerations for Investors

Categories Author: Ehren Stanhope, Income, Investing

Here I’ll cover the first 2 of the 5 key considerations for equity income investors, and 3 more in Part 2.

At a time when demand for income generating assets is at an all-time high, the yields on income generating assets are at, or near, all-time lows. While the headlines often speak to the number of Baby Boomers entering retirement, the more important statistic is actually the amount of wealth entering retirement. Continue reading “Equity Income — 2 (of 5) Key Considerations for Investors”