Fundamental Indexing: active management performance with index fees?

The case for passive investing is often couched in terms of the inability of active managers to “beat the market”, with the market in turn usually defined as a capitalisation weighted equity index such as the S&P/ASX 200. Yet as this note will demonstrate, using an alternative approach to passive indexing can potentially be used

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Give your portfolio the “EX” factor

When it comes to the Australian sharemarket, there are a couple of mantles Australians can claim over our international counterparts. Firstly, Australians have some of the highest levels of share ownership in the world, with 33% of us owning shares directly*.  Secondly, by global standards,  the concentration of this ownership in large-cap shares is relatively

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Portfolio Diversification II: The importance of fine-tuning

Last year I addressed the concept of portfolio diversification and how we can assess it quantitatively through the use of return correlations. Just to recap: Correlation refers to the strength of the co-movement between two assets or portfolios (ranging from -1.0 or perfect negative correlation to +1.0 or perfect positive correlation) Diversification benefits – where

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Time is on my side – equities for the long run

We all know the equity market has its ups and downs. Bullish runs are often interrupted by sharp corrections or extended bearish periods, even amid little change in fundamentals. With so much ‘noise’, how should investors be thinking about their equity investments? I studied the historical data to try to get some answers about longer

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Nothing but net! Why fundamental indexing has outperformed market-cap since the US Presidential Election

Donald Trump’s US Presidential election victory has led to widespread re-pricing of asset prices across the globe, as evident from a rising U.S. dollar, rising bond yields and higher equity prices. Within the US equity market specifically, moreover, there has also been notable sector rotation toward better valued financial and energy stocks, and away from

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Raising the benchmark: How and why fundamentally weighted indices have been outperforming

With the rotation out of high priced defensive income stocks in the Australian equity market in recent months – and toward sectors offering relatively better value, such as resources – fundamentally weighted indexing methodologies have again demonstrated their ability to outperform traditional market-cap weighted indices over time. Dynamic value tilts through a fundamentally weighted index

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Is this Japan’s time to shine?

The weakness of the Japanese Yen in recent weeks following the Trump-led strength in the US dollar has once again thrown the spotlight on the performance potential of Japanese equities. Indeed, it may come as a surprise to some investors that, despite the relative weakness of the Japanese economy in the past decade or so,

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Are Financials now good value?

As has been evident at investor briefings in recent days, Australian banks appear to be conceding that their past relatively high (by global standards) returns on equity can’t be sustained, due to pressure on net-interest margins and increased capital requirements. That said, given the underperformance of banks over the past year or so – especially

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Location, location, location! Is your ETF Australian domiciled?

Exchange traded funds (ETFs) that provide access to international markets, sectors and specific thematics continue to boom on the ASX – there are now approximately 70 ETFs providing international equity exposures. International ETFs provide Australian investors with a simple and cost effective way to access growth opportunities, including under-represented – or even absent  – sectors

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