Category Products
Smart-Beta Perspectives: Are you confused as well?
In a nutshell Smart-beta is lower cost approach to rule-based algorithmic active management. In general, nirvana is to outperform the market, the strategy here is to use risk factor tilts which historically delivered risk premia. Outperformance, if any, is usually at the cost of higher volatility/risk without necessarily delivering sustained risk-adjusted return. Capacity limitations suggest […]
Target-Date Funds a passing fad? Problems and solutions to using TDFs as a 401(k) default or option
In a nutshell Since target date funds (TDFs) became available as a permissible default or an option for 401(k) accounts, their popularity has been exploding, with predictions that within a decade 50% of 401(k) funds will be in TDFs. But some are raising valid concerns about these supposed “one decision” “low/no maintenance” funds. Given the […]
Protecting the Downside, while Participating in the Upside
Protecting the Downside, while Participating in the Upside A couple of months ago in “Lifecycle investing” I, superficially touched, upon Zvi Bodie’s view that diversification is not the only way to reduce investment/market risk. In fact, according to him, it may not even be the best way. In a reference that I quote in that […]
Structured Products III – Create Your Own Enhanced Index Product
Structured Products III – Create Your Own Enhanced Index Product In Structured Product II- Good or Bad? It Depends on Your “View” we discussed how to compare products with different performance characteristics, by using your “view” of the probability of future returns and we compared the expected outcome (value) of an enhanced index structured product […]
Structured Products II- Good or Bad? It Depends on Your “View”.
Structured Products II- Good or Bad? It Depends on Your “View”. An earlier blog provided an overview of Structured Products . As a specific structured product application consider an enhanced index product with six year maturity whose payback is 1.45x the reference price index return in local currency (without dividends),when it is positive, ; and […]
GMWB II- Guaranteed Minimum Withdrawal Benefit II
GMWB II- Guaranteed Minimum Withdrawal Benefit II This is a follow-up to the GMWB I blog of a few weeks ago, where I also described the characteristics of typical GMWB products. Here I will compare various decumulation options with the hypothetical GMWB product described earlier and various parameters. This will get a little technical, but […]
GMWB I – Guaranteed Minimum Withdrawal Benefit (Preliminary)
GMWB I – Guaranteed Minimum Withdrawal Benefit (Preliminary) I have received questions about Guaranteed Minimum Withdrawal Benefit (GMWB) products from a number of individuals. So this is the first of a couple of in-depth blogs on the subject. (Follow-up blogs are available at GMWB II- Guaranteed Minimum Withdrawal Benefit II, GMWB III – Q […]
There are risks, but I’ll stay with ETFs for my money: ETF concerns- Has anything changed?
There are risks, but I’ll stay with ETFs for my money: ETF concerns- Has anything changed? In a nutshell Yes there are risks everywhere, but I am sticking with ETFs so long as they are used as they were intended to be. Broad/diversified asset classes (except where accessing in a limited application otherwise inaccessible asset […]
Are “target-date” funds or age-independent “fixed-asset allocation” right for you?
Are “target-date” funds or age-independent “fixed-asset allocation” right for you? In “Target-date funds I” and “Target-date funds II” I discussed some of the advantages and disadvantages of target-date funds and some simple methods for doing a low-cost implementation. In my May 11, 2008 Hot Off the Web blog I referred to a recent article in […]
Target-Date Funds II
Target-Date Funds II A few weeks ago in my Target-Date Funds (also called Lifecycle Funds) blog, I outlined some of the advantages and potential problems with them. I promised to look at a simple model that you may choose to use to implement your own custom Lifecycle/Target Date Fund using existing ETFs. In “Lifecycle funds: […]
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