How Much More Pain Is There?
March 10, 2020
How Much More Pain Is There?
March 10, 2020
Andrew Slimmon, Head of the Applied Equity Advisors Team, offers a timely perspective on what is shaping the markets now as well as insights on investment opportunities and risk within global equities. Listen to his Market Alert.
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Past performance is no guarantee of future results. The returns referred to in the audio are those of representative indices and are not meant to depict the performance of a specific investment.
There is no assurance that a portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the portfolio will decline and may therefore be less than what you paid for them. Accordingly, you can lose money investing in this portfolio. Please be aware that this portfolio may be subject to certain additional risks. In general, equities securities’ values also fluctuate in response to activities specific to a company. Stocks of small-and medium-capitalization companies entail special risks, such as limited product lines, markets and financial resources, and greater market volatility than securities of larger, more established companies. Investments in foreign marketsentail special risks such as currency, political, economic, market and liquidity risks. Illiquid securitiesmay be more difficult to sell and value than publicly traded securities (liquidity risk). Non-diversified portfolios often invest in a more limited number of issuers. As such, changes in the financial condition or market value of a single issuer may cause greater volatility.
The indexes are unmanaged and do not include any expenses, fees or sales charges. It is not possible to invest directly in an index. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto. The MSCI World Total Return Index (Net) measures the price performance of markets with the income from constituent dividend payments. The net total return index reinvests dividends after the deduction of withholding taxes, using (for international indexes) a tax rate applicable to non‐resident institutional investors who do not benefit from double taxation treaties. The S&P 500® Index measures the performance of the large cap segment of the U.S. equities market, covering approximately 75% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. The Russell 1000® Index is an index that measures the performance of the 1,000 largest companies in the Russell 3000 Index. The Russell 3000® Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.
Alpha is the risk adjusted excess return or value added (positive or negative) of the portfolio’s return relative to the return of the benchmark. Beta is a measure of the relative volatility of a security or portfolio to the market's upward or downward movements. A beta greater than 1.0 identifies an issue or fund that will move more than the market, while a beta less than 1.0 identifies an issue or fund that will move less than the market. The Beta of the Market is always equal to 1. Sharpe ratio is a risk-adjusted measure calculated as the ratio of excess return to standard deviation. The Sharpe ratio determines reward per unit of risk. The higher the Sharpe ratio, the better the historical risk-adjusted performance. R-squared measures how well an investment’s returns correlate to an index. An R squared of 100 means the portfolio performance is 100% correlated to the index’s, whereas a low r-squared means that the portfolio performance is less correlated to the index’s. Information ratio is the portfolio’s alpha or excess return per unit of risk, as measured by tracking error, versus the portfolio’s benchmark. Upside capture ratio is a statistical measure of an investment manager’s overall performance in up-markets. The up-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has risen. Downside capture ratiois a statistical measure of an investment manager’s overall performance in down-markets. Downside capture indicates how correlated a fund is to a market, when the market declines. Standard deviation shows how much variation or dispersion from the average exists. In finance, standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility. Tracking error is the amount by which the performance of the portfolio differs from that of the benchmark. Price-Earnings (P/E) is the price of a stock divided by its earnings per share for the past 12 months. Sometimes called the multiple, P/E gives investors an idea of how much they are paying for a company’s earning power. The higher the P/E, the more investors are paying, and therefore the more earnings growth they are expecting. NTM = Next Twelve Month. All forecasts are subject to change at any time and may not come to pass due to changes in market or economic conditions. Weighted Average Market Capitalization is a stock market index weighted by the market capitalization of each stock in the index. In such a weighting scheme, larger companies account for a greater portion of the index. Most indexes are constructed in this manner, with the best example being the S&P 500. Dividend yield is the ratio between how much a company pays out in dividends each year relative to its share price. Portfolio turnover is a measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by taking either the total amount of new securities purchased or the amount of securities sold -whichever is less -over a particular period, divided by the total net asset value of the fund. Active share is the fraction of the portfolio or fund that is invested differently than its benchmark as of the last day of the reporting period. Basis point (BPS) refers to a common unit of measure for interest rate.
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