Whenever there are opportunities to generate enhanced returns, the global asset management industry will seek to exploit these opportunities. This is especially true when there are market anomalies which have a well-researched potential to generate additional returns, the so-called alpha, over the long run in the portfolios of investors. Some of these well-researched sources of alpha are the so-called factors. Factor investing is an investment approach that targets specific quantifiable characteristics of a security, which can explain differences in the returns of securities. There are three kind of factors which can be seen as drivers for the returns of all

Factor investing ETFs are ETFs which are replicating an index that is using one of the scientifically proven factors (dividends, growth, liquidity, momentum, quality/credit quality, size, value, volatility, and yield) to determine its constituents. As a result, from this process the portfolio of the factor investing index may vary significantly from the portfolio of the parent index, even while investing in the same market(s). Since there is scientific proof that the factors mentioned above are able to generate alpha compared to their parent index over a full investment cycle, some investors and market observers used the term smart beta for

Fathom’s measure of China’s economic activity, its CMI 2.0, continued its descent in May, slowing to a 15-month low of 6.2%. Refresh the chart in your browser | Edit chart in Datastream Below the official estimate of GDP growth, which was 6.7% in the second quarter, the widening wedge between Fathom’s measure and the official measure is increasingly reminiscent of the gap that emerged in late 2013 – 2015. Back then, just as they are now, the Chinese authorities used monetary stimulus to support short-term growth, repeatedly cutting banks’ reserve ratio requirements while denying that the economy was materially slowing. Refresh the

As 2017 draws to a close (this will be the last Market Insight of the year so Happy Holidays everyone!) it is fair to say that the past 12 months weren’t especially kind to the bears. Global equities, despite looking expensive on standard valuation metrics, generated double digit gains in developed markets (EAFE Index +19%) while emerging market equities recorded even stronger gains (EEM Index +27%). Adding to the misery for the bears, the sell-off in bonds witnessed in the final weeks of 2016 failed to evolve into the multi-decade trend reversal many investors anticipated it would[1]. Thankfully, we were

Fathom’s measure of economic activity in China – our China Momentum Indicator (CMI) – fell from March’s two-year high of 3.4% to 3.3% in April. Refresh the chart in your browser | Edit chart in Datastream Our China Momentum Indicator (CMI) fell from by 0.1 percentage points between March and April to 3.3%. A slower pace of annual growth in electricity production and railway freight volumes was responsible. But, at 5.4% and 15.5% respectively, China’s economy continues to be driven by these old growth engines of investment and export-led growth. Yet again Chinese policymakers are opting for the easy route

Exchange-traded funds (ETFs) that invest based on factor strategies have become very popular in Europe over the last three years. Investing with a factor strategy means these funds do not follow a market capitalization-weighted index. Since “factor-based strategy” is a technical term that sounds rather complex, marketing departments and media companies have named these products “smart beta ETFs,” since the factors and strategies used generate better risk-adjusted returns over time than do market capitalization-weighted indices. The main factors used in these strategies are: Low volatility/minimum variance Momentum Size Quality Value These factors have either a regional or global investment focus.

In the low interest rate environment in Taiwan, Lite-On Technology dividends look sustainable and attractive.

With a possible market shift from momentum to value, Cisco comes through as a star.

Jake Moeller reviews the inaugural Lipper Fund Selectors & Fund of Funds Forum held at the Thomson Reuters Auditorium, Canary Wharf on July 14, 2015. The webcast replay of this event is available for viewing here. Mutual funds are always being keenly discussed, and Thomson Reuters hosting an event, along with the Chartered Institute of Securities and Investment (CISI), dedicated exclusively to this topic saw a full and expectant house of around 120 guests. Attendees drawn from private wealth, IFAs, mutual fund managers, fund gatekeepers, platform providers, as well as investors witnessed an informative and entertaining three-hour session of panels