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Full-Text Articles in Business
Low Volatility Etfs, Steven D. Dolvin
Low Volatility Etfs, Steven D. Dolvin
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A recent trend is the development of low volatility funds, including both ETFs and mutual. These funds invest in a subset of a specified index, selecting only those stocks with low price volatility (which may be identified by a low beta). There is not sufficient history to gauge the performance of such funds, but two issues are worth noting. First, given the impact of volatility on compounded returns (i.e., geometric averages are lower than arithmetic averages), low volatility funds should have an advantage, particularly in otherwise volatile markets. Second, value funds may outperform over long periods (albeit not every period), …
Index Etfs -- Not Created Equal, Steven D. Dolvin
Index Etfs -- Not Created Equal, Steven D. Dolvin
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You might expect that all "Large Cap" ETFs are the same, as they would likely track the S&P500 index. However, in an effort to reduce costs, many ETF providers (such as Vanguard) are replacing the standard index with others that charge lower licensing fees. This allows the providers to either reduce the expenses they charge or increase operating margins. As providers make this switch, it could also impact the underlying holdings to the extent that differences occur across the indexes. See article here, Wall Street Journal.
"Alternative" Alternative Investments, Steven D. Dolvin
"Alternative" Alternative Investments, Steven D. Dolvin
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Typical Alternative Investments include such categories as commodities and real estate. However, some investors have branched out into more esoteric assets such as cars and collectibles. As such, there is a growing category of managers offering such funds. See the article here, Wall Street Journal.
Target Date Funds, Steven D. Dolvin
Target Date Funds, Steven D. Dolvin
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Target date funds (or lifecycle funds) have simplified the investment process for many people. However, they are not without their own potential problems and differences. This article (CNN Money) gives a good overview of the main issues.
Etfs Vs. Etns, Steven D. Dolvin
Etfs Vs. Etns, Steven D. Dolvin
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While ETFs are essentially market-traded products that are similar to mutual funds, ETNs are actually more like a variable rate fixed income product that is "guaranteed" by the issuer. This difference adds a significant element of counterparty risk. Further, most ETNs are treated like partnerships, which means that taxes on gains (and losses) are treated differently, with recognition required each year (Statement K-1) rather than simply at sale. See a brief article here, USA Today.
Improving Alpha, Steven D. Dolvin
Improving Alpha, Steven D. Dolvin
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Alpha is a measure of risk-adjusted performance. Positive alpha means an investment manager has generated returns in excess of what should have been earned given the level of risk taken. However, what if two funds have the same alpha--are they equally good? Well, tracking error helps to distinguish which fund might be better, as a lower tracking error might mean less risk and a more significant alpha. (See article here, Wall Street Journal.) The Information Ratio divides alpha by tracking error to provide a more comparable performance metric.
Mutual Fund Oversight, Steven D. Dolvin
Mutual Fund Oversight, Steven D. Dolvin
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Like corporations, mutual funds have board of directors. However, they often exhibit much less oversight and control. Thus, there is debate whether they actually provide any value or simply serve as figureheads. See article here, Smart Money.
Actively Managed Etfs, Steven D. Dolvin
Actively Managed Etfs, Steven D. Dolvin
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ETFs were originally designed as alternatives to index funds, but ones that could be actively traded like stocks -- meaning continuous trading and the ability to short and margin. As ETFs have developed, however, they are now moving into active (as opposed) to passive management. This may increase costs, but it provides another avenue for potential investors. See the article here, Index Universe.
Alternative Investments For The Masses, Steven D. Dolvin
Alternative Investments For The Masses, Steven D. Dolvin
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Historically, hedge funds and private equity funds have only been available to qualified (i.e., rich) investors. However, new ETFs offer the opportunity for smaller investors to join the party. Check out the new AlphaClone ETF, which will be offered on the International Securities Exchange.
Popularity Of Alternative Investments Rises, Steven D. Dolvin
Popularity Of Alternative Investments Rises, Steven D. Dolvin
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Alternative investments were once thought to be the domain of sophisticated, wealthy investors. However, they are gaining popularity among financial advisors (and their clients) as they realize the potential diversification benefits they provide. In particular, hedge funds and private equity funds are becoming increasingly common additions to even mid-market investors. (See article here, Reuters.)