Is Emerging-Markets Investing Worth the Risk? morningstar.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from morningstar.com Daily Mail and Mail on Sunday newspapers.
The December 2020 addition of Tesla (TSLA) to the S&P 500 was a useful reminder of the significant differences between apparently similar indexes with respect to how they select stocks, weight them, and maintain their portfolios over time. A casual observer of markets could easily be forgiven for having assumed that Tesla was a component of all major U.S. stock indexes well before the end of last year given its mainstream ubiquity and mushrooming market capitalization. Plus, one of the major points of appeal of broad market indexes is, well, their breadth. They tend not to miss out on much. But not all big benchmarks are similarly broad, nor do they all take the same approach to which stocks they let in and those they leave out.
Just 49% of the nearly 3,500 active funds included in our analysis survived and outperformed their average passive counterpart in 2020. This number isn t far off from what it was when we assessed these funds in mid-2020, reinforcing the view we shared then: There s little merit to the notion that active funds are more capable of navigating market volatility.
We further analyze these findings in the year-end 2020 installment of the Morningstar Active/Passive Barometer, a semiannual report that measures the performance of U.S. active funds against passive peers in their respective Morningstar Categories. The Active/Passive Barometer spans nearly 4,400 unique active and passive funds that accounted for approximately $15.9 trillion in assets, or about 67% of the U.S. fund market, as of the end of 2020. Morningstar Direct clients can access the full report here.
Navigating an Ocean of ESG Strategies morningstar.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from morningstar.com Daily Mail and Mail on Sunday newspapers.
I last wrote about real estate investment trusts in February 2020, but a lot has changed since then. In this article, I ll explain why REITs can still fill a role in a portfolio but aren t necessarily a must-have for diversification.
Diversification Benefits Waning
As with my previous article, I ll focus on investing in equity real estate securities, primarily real estate investment trusts. REITs are companies that own and/or operate real estate properties, including shopping malls and other retail outlets, office buildings, warehouses, apartment buildings, and hotels.
Because its performance can be highly cyclical and idiosyncratic, real estate has generally had a lower correlation with both equities and fixed-income securities than most other asset classes. Over the period from 1972 through Feb. 28, 2021, the correlation between the FTSE Nareit Equity REITs Index and the S&P 500 averaged about 0.59. (A correlation of 1.0 would indicate two assets moving in perfect lock step,