Despite bleeding billions of dollars during the recent chaotic stretch on Wall Street, the S&P 500 SPDR (SPY) is still the largest exchange-traded product in the world; with more than $75 billion in assets, the popular fund is larger than the GDP of many countries. A big chunk of the assets in SPY are held by traders with a relatively short time horizon; the high turnover of shares in SPY–about 35% of the shares outstanding change hands everyday–highlights the appeal of this vehicle to active traders who measure holding periods in minutes and hours [see also Gold SPDR Close To Overtaking SPY As Largest ETF In The World]. [click to continue…]
To this point, much of the tremendous growth in the ETF industry–we now have close to 1,200 U.S.-listed exchange-traded products with aggregate assets approaching $1.1 trillion–has been attributable to “passive” products; those that seek to replicate the benchmark of an index. Several actively-managed ETFs have debuted in recent years, but investor response to these products [...]
The impressive rise of the ETF industry in recent years is often held out as evidence of an ongoing shift in investor preferences away from costly active management and towards low cost indexing. Investors frustrated with the inability of pricey mutual fund managers to consistently beat their benchmark have abandoned stock picking in favor of [...]
When ETFs began to make their way into the investing mainstream, almost all products were “plain vanilla” funds linked to well known stock benchmarks, such as the Dow Jones Industrial Average and S&P 500. But as the popularity of ETFs has surged, so too has the number of product offerings, with approximately 30 issuers now [...]
At the core of many investor portfolios is an allocation to large cap, U.S.-listed equities. With market capitalizations usually exceeding $10 billion, large cap stocks generally have long operating histories, stable operations, and large amounts of cash on hand, making them less risky investments than small and mid cap firms. Moreover, although domestic large caps [...]
In the summer of 1992, Eugene Fama and Kenneth French published “The Cross-Section of Expected Stock Returns” in The Journal of Finance, a groundbreaking analysis that prompted financial presses to run headlines declaring “beta is dead.” While the death sentence may have been a bit severe, it struck a significant blow to a widely-accepted and [...]
