Style Research recently released Q3 2017 Factor Performance Results. The article below recaps the live presentation by Bernie Nelson on October 10, 2017. Detailed reports and the webinar recording are also available. Read More
Emerging markets are on fire. With regional stocks rising by 28% to end-September, momentum and forward-looking growth have been the leading investment styles behind this surge. And stocks with high 12-month growth and forecast revisions are at the head of this pack. (See Figure 1.) Read More
Author: Peter Hopkins | Categories: Markets Analysis
Style Research applies six criteria to identify a factor framework for effective fund identification, comparison, and research. Our “Effective Factors” blog series has been exploring these criteria further. Here we discuss the benefits of being selective about factors for effective fund analysis.
How are fund buyers supposed to know which factors will be important for comparing thousands of equity funds when the underlying investment approaches are so different? How can they filter funds that reflect their investment views? Read More
Author: Bernie Nelson | Categories: Portfolio Analysis
Bernie Nelson of Style Research discusses with U.S. News what to watch out for when a benchmark changes. Careful measurement is key when evaluating subsequent changes in an index fund. “The changes are not always immediately obvious,” says Bernie. What should investors consider?
Read more in the U.S. News & World Report article by Jeff Brown, “What to Do When Your Index Fund Changes.”
Style Research applies six criteria to identify a factor framework for effective fund identification, comparison, and research. In this next post in our “Effective Factors” blog series, we take a deeper look at how an effective factor framework can help differentiate products in a more insightful way.
More investors are tuning in to the potential merits of factor investing and extending their investment thinking and fund selection to consider style categories such as quality, momentum, and volatility, alongside the more traditional styles such as value, growth, and size. An obvious question springs to mind.
Why are we still using style boxes that partition funds into Large Value, Mid Blend, and Small Growth type categories?
Author: Bernie Nelson | Categories: Portfolio Analysis
Authers’ Note: The Value of a Clean Balance Sheet
“Value is often a style that begins to win as soon as economies start to recover.” So why is value underperforming? John Authers of the FT spoke to Bernie Nelson of Style Research to understand what is happening. Bernie observes that so far this year, it is actually the factor of predicted growth that is contributing most to performance.
Read more in the Financial Times article, Authers’ Note: The Value of a Clean Balance Sheet, including Style Research analysis.
Analysts delve deep into portfolio holdings to see what drives performance.
The Fidelity Magellan fund, it is fair to say, has had its ups and downs. This should perhaps be no surprise given it was launched in 1963. Since then it has had eight managers, each one doing things differently from the last. Read the Citywire article, including independent analysis and charts from Bernie Nelson of Style Research.
Not every factor out there is effective, or even credible, for the process of equity research and analysis. While this is hardly news, it’s an issue that hasn’t received enough focus – given the billions of dollars that are dependent on this research.
John Cochrane, currently a Senior Fellow of the Hoover Institution at Stanford, coined the now ubiquitous term “factor zoo” in his paper Discount Rates. Cochrane described the over-proliferation of factors used for analysis – and the resulting confusion for today’s professionals who must understand what these factors mean, how they are distinctive, and how to best apply them.
Twenty years ago, Style Research established criteria to consistently identify factors that support an effective analytical factor framework – criteria that are key when tackling the “factor zoo.” (See “How To Differentiate Equity Products: Six “Must Haves” For A Style Factor Framework” and its related infographic). In this “Effective Factors” blog series, we’ll provide deeper perspective on the six criteria we apply to identify qualified factors to build into our analytics and why these criteria are important to equity fund research. Read More
Comparing Fundamental Active, Smart Alpha, and Smart Beta Funds with Objective Factors
Learn how factor-based analysis of funds can identify underlying – and often unexpected – differences in similarly labeled funds. In a previous Style Research article, Bernie Nelson discussed key criteria for an effective factor-based analytical framework. In this new case study, Bernie puts this approach into practice, analyzing three funds labeled “US Large Value.” A deeper, more detailed comparison using transparent factors reveals distinctions in stock diversification, sector exposures, and specific styles – and shows how these funds are more different than their descriptions would indicate.
The DOL Fiduciary Rule adds pressure on asset managers and financial advisors already encumbered by increasing competition and ongoing regulatory change. That’s why factor-based analysis is so valuable. Analyzing funds based on individual factor exposures provides the level of insight, detail, and transparency that enables managers to respond not only to the new rule but to demonstrate greater product differentiation and deliver better customer service.