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Concentration, Diversification, and the Small Company Premium Abroad

by: Lawrence Hamtil  on Wednesday, February 28, 2018

Recently, the Indexology Blog produced by S&P Dow Jones published an interesting article showing that when sectors become excessively concentrated, - meaning that relatively few companies constitute a large portion of the sector, - sector portfolios that are equal-weighted (that is, more exposure to smaller companies) are subsequently likely to outperform (graphic via SPDJ): Read More

The Case for Global Small Caps Is Strengthening

by: Lawrence Hamtil  on Monday, February 19, 2018

It has been widely-discussed that 2017 was the first year in quite some time that just about every major region outperformed the U.S. equity markets, at least when measured in dollar terms.  What has been less discussed, however, is that global small cap stocks, - whether in Japan, Asia, Europe, or emerging markets, - outperformed small cap U.S. stocks by an even greater margin.  In fact, you would have to go back to 2005 to see such strong and widespread performance for non-U.S. small caps relative to U.S. small caps: Read More

Worried About the Economy? Look for Clues in Consumer Discretionary

by: Lawrence Hamtil  on Monday, February 12, 2018

The market's vicious sell-off has investors reacquainted with nervousness for the first time in a long time, and there has been no shortage of explanations for the return of volatility.  Some have breathlessly called this sell-off the start of a new bear market, never mind the fact that bear markets outside of recession are extremely rare, as CNBC's Michael Santoli points out this morning.   Read More

The Case for A Low-Volatility - Momentum Barbell

by: Lawrence Hamtil  on Friday, February 02, 2018

S&P's Indexology blog recently published a great paper titled "Outperformance in Equal-Weight Indices."  In the paper, the authors looked at several different ways in which investors could create "barbell" strategies with various equity indices.  For example, the authors demonstrated the usefulness of pairing the small company and value exposures offered by equal-weighting with a momentum strategy, as well as the utility of paring equal-weighting with low volatility.   Read More