March 15, 2021
Value stock ETFs are rebounding, but that doesn’t mean advisors need to go ‘all in’ on the investment factor.
Consider the U.S. Multi-Factor Model Portfolio, which is part of WisdomTree’s Modern Alpha series of model portfolios. This selection may be a bargain foundation for some, but it’s not just pure value exposure.
“This model portfolio is designed for investors with a long-term horizon looking for exposure to a broad universe of U.S. equities primarily using factor focused ETFs. The selected ETFs provide certain factor tilts that have the potential to generate excess return relative to comparable cap-weighted benchmarks over longer-term holding periods,” according to WisdomTree.
Afraid of a Market Pullback? Hybrid Approaches for Uncertain Times March 14, 2021
The economy has staged an impressive comeback from last year’s drop, even fueling concerns that the market at large is overvalued. Forward-thinking investors may want to consider hybrid approaches. Convertible bonds have the potential to generate equity-like returns without the volatility, while preferred stocks may enhance yield without sacrificing credit quality.
In the upcoming webcast,
Afraid of a Market Pullback? Hybrid Approaches for Uncertain Times, Sandra Testani, Vice President, ETF Product and Strategy, American Century Investments; and Rene Casis, ETF Portfolio Manager, American Century Investments, will explore alternate strategies for a market that is stretching valuations to precipitous levels.
Why Non-U.S. Small Caps Are Compelling Long-Term Investments
International small caps are one of the most overlooked asset classes in the ETF investing space. The
ERShares NextGen Entrepreneurs ETF (ERSX)is showing investors exactly why this group shouldn’t be ignored.
ERSX selects the most entrepreneurial, primarily Non-U.S. Small Cap companies, that meet the thresholds embedded in its proprietary Entrepreneur Factor (EF). ERShares’ ETF delivers strong performance across a variety of investment strategies without disrupting investors’ underlying risk profile metrics. Their geographic diversity enables them to harness global advantages through additional returns associated with currency fluctuations, strategic geographic allocations, comparative trade imbalances, and relative supply/demand strengths.
Key Takeaways
In 13 of the last 15 calendar years, the average large-cap active mutual fund lagged the widely followed S&P 500 Index. In 2020, just 40% of large caps kept pace with the benchmark behind Vanguard S&P 500 ETF (VOO) and Vanguard 500 Index Fund (VFIAX), according to the latest SPIVA Scorecard.
High fees eat into actively managed fund returns, with large-cap mutual funds commonly charging a 100-basis-point expense ratio. The average large-cap mutual fund lagged the S&P 500 by 170 basis points in 2020.
Three times as many active large-cap funds outperformed the S&P 500 Index during quarters when the S&P MidCap 400 Index performed relatively well compared to when it lagged, a signal that active managers’ efforts to differentiate a fund often involved a smaller-cap bias.
By Bob Smith, Sage President & CIO
According to a recent letter written to the Texas Public Utility Commission (PUC) by Potomac Economics, the Electric Reliability Council of Texas (ERCOT) made a $16 billion error in pricing during the week of Winter Storm Uri. This reportedly occurred because the PUC directed the grid operator to set wholesale power prices at $9,000 per megawatt hour for two days during the storm the maximum market price allowed. Retail power providers then bought power from the wholesale market to deliver to consumers, because they were contractually obligated to do so. Because ERCOT failed to bring prices back down on time, those companies had to buy power in the market at extremely inflated prices.