Today’s Financial Markets

Equity Mutual Funds’ “Active Share”

Here’s a remarkable initiative from the U.K., which you should not expect to see replicated here in the U.S., despite its significant value to investors. Neptune Investment Management, an active equity fund manager in the U.K., has announced that it will publish the “active share” if each of the funds it manages. What does this mean? Well, a fund’s active share is a measure of the extent to which the stocks in its portfolio differ from those comprising the index against which it should be benchmarked. For example, a large-cap U.S. equity fund might reasonably be benchmarked against the S&P […]

Another Bad Year For Active Managers

From the Financial Times (11/11/2014): “Fewer fund managers are beating the market this year than at any time in over a decade, piling further misery on a profession that faces increasing investor scepticism.” Among actively-managed U.S. large-cap equity funds, “Only 17.7 per cent are beating the Russell 1000 index of large-cap stocks so far this year. That compares with 40.5 per cent for 2013 as a whole.” Since 2003, “there has only been one year–2007–when a majority of active managers beat the market.” Every year, of course, there’s some convincing new reason why the “irrational”market once again stumped the managers. […]

Looking Ahead

As the Fed’s asset purchase program ends, the price of oil plunges, global growth stalls, and the stock market recovers from its fall jitters, this seems like a good time to take a long view of where we are in the post-apocalypse recovery. The best guide to any such assessment remains Reinhart and Rogoff’s brilliant survey of financial crises, This Time Is Different, published in 2009. In their preface, they write: “If there is one common theme to the vast range of crises we consider in this book, it is that excessive debt accumulation, whether it be by governments, banks, […]
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