Resources

Why Investors Choose Principle Over Profits

Larry Swedroe unpacks a new study into whether such decisions are driven by intrinsic social preferences, financial reasons or other motives entirely. Socially responsible investing (SRI) has gained a lot of traction in portfolio management in recent years. In 2016, socially responsible funds managed about $9 trillion in assets from an overall investment pool of…

Does Active Management Pay in Bond Markets?

Larry Swedroe examines a new study that highlights the negative relationship between activity and performance in bond funds. Does it pay to be active in fixed-income markets? To help answer that question, Martin Rohleder, chair of Finance and Banking at the University of Augsburg, examined the performance of active fund managers in his December 2017…

Hedge Fund Activity Is No Gauge of Outperformance

A Larry Swedroe unpacks these findings, and explains why they offer yet another reason investors should avoid a loser’s game. As I recently observed, hedge funds began 2018 coming off their ninth-straight year of trailing U.S. stocks (as measured by the S&P 500 Index) by significant margins. And for the 10-year period ending 2017—one that included…

Financial Distress and Stock Returns

Larry Swedroe looks at research into the anomaly that exists in the relationship between default risk and equity returns. The most basic of asset pricing theories is that riskier assets should command higher expected returns. Clearly, financial distress is a risk characteristic, but it’s one that presents a dilemma, as there has not been a…

Are You Compensated for Fat Tail Risk?

Larry Swedroe tackles new research into “fat tails” and how this seemingly intuitive measure of risk actually affects equity prices. Despite the fact that financial theory suggests stocks with high volatility should have higher expected returns—because investors cannot fully diversify away from the firm-specific risk in their portfolios—a growing body of empirical evidence demonstrates a…

Factor-Based Investing Remains Alive and Well

After looking into whether the “curse of popularity” has impacted factor premiums’ sustainability, Larry Swedroe can only conclude that it seems clear rumors of the death of factor-based investing are premature. Factor-based investing has achieved great popularity, with hundreds of billions of dollars in assets flowing into funds that offer exposure to factors such as…

Realizing Tax Efficiency

With taxes on our mind these days — thanks both to the recently enacted Tax Cut and Jobs Act of 2017 and the fast-approaching tax day, this year falling on April 17 — this month’s InFocus shares a collection of resources and insights that take a wide-eyed look at the importance of achieving a tax-efficient…

Hope Deferred Makes the Heart Sick

Tomorrow is never promised. Tim Maurer on why it’s entirely responsible to budget for unabashed enjoyment. “Hope deferred makes the heart sick, but a longing fulfilled is a tree of life.” So reads a Solomonic proverb penned in the 10th century B.C. Consider with me, however, a contemporary application of this ancient wisdom, especially in…

Warren Buffett’s Secret Sauce Loses Its Flavor

In a recent article, Wall Street Journal columnist Jason Zweig noted that Berkshire Hathaway’s stock had underperformed the S&P 500 Index over the 10 years ending in 2017, 7.7% versus 8.5%. Zweig hypothesized that the reason for the underperformance is that the size of Berkshire Hathaway’s portfolio has grown so large that it creates a burden…

Are You a Complainer, Consumer or Contributor? 

Tim Maurer explores how the role we fill as learners and leaders can have wide implications in both our personal and professional lives. Are you a Complainer, Consumer or Contributor in the workplace? In Adam Grant’s book, Give and Take, he differentiates between three types of people–Givers, Matchers and Takers–categorizations that have implications in both our…

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