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In the fist article in this series we talked about some of the implications of this new market environment with choppy markets and V shaped corrections.  Time will tell whether this type of market environment is the “new normal”, something that is likely to happen more frequently, or an anomaly that is unlikely to happen […]

Two things happened this month that hammered a couple of more nails into mutual fund coffin.  First we saw the Third Avenue announced that they are suspending investor redemptions from their junk bond fund.  They way mutual funds work if an investor wants to redeem shares then the mutual fund manager either uses cash on […]

The past two years have been difficult ones for tactical asset allocation (TAA).  The continual V shaped corrections and a lack of trend in any asset class has caused TAA strategies to lag the US market.  On the plus side, TAA strategies have outperformed global asset classes and since we are probably closer to the […]

Tactical methodologies have a number of different factors which influence their results.  Making a small change to any factor can drastically change the results of the methodology.  For example, most trend following methodologies have a lookback period and a rebalancing frequency.  The lookback period can either be long or short and the rebalancing frequency could be monthly, weekly […]

Investors are aware of the term duration as applied to bonds.  Duration is the measure of how sensitive a bond will be to moves in interest rates.  Typically, the longer term the bond is, the more sensitive to changes in rates.  Shorter term bonds are less sensitive to changes in rates.  Tactical methodologies also have […]

ETF.com recently posted an article entitled Beware Tactical Asset Allocation The article brought up a couple of great points: 1. Tactical Asset Allocation (TAA) is really just market timing2. Very few TAA funds as measured by Morningstar beat the benchmark of a balanced fund (60% Stocks/40% Bonds) Market timers try to predict the stock market. […]

Trend following methodologies attempt to buy into market strength and sell into market weakness.  Counter trend methodologies do the opposite, buying into market weakness and selling into market strength.  Trend following works under the premise that investments tend to trend over time and works best over intermediate term time frames (1-6 months).  Counter trend models […]

The debate about whether smart beta strategies add value vs. market cap weighted indices will probably never end.  Smart beta strategies continue to launch with impressive backtested results that show outperformance over market cap weight.  The main questions revolve around whether those backtests are curve fitting and/or anomalies and whether that outperformance can persist. If […]