29 Jul 2014

Pension Cuts Hedge Fund Investments

I was reading the Wall Street Journal over the weekend and saw that the California Public Employees Retirement System (Calpers) was cutting back their hedge fund exposure by 40 percent. Given that hedge funds have generally struggled over the past five years, I was interested to see what the article said, and, basically, it said that they weren’t happy with the lackluster performance and high fees. The article then said… Read More

By Tags: , ,
24 Jul 2014

Visualizing Bond Returns

Over the years, we’ve seen and created a ‘periodic table’ of returns that stacks asset classes in order of their performance on a year by year basis.  By color coding each asset class, most investors look at the table and realized that asset classes jump around a lot and it’s difficult, if not impossible, to make good timing decisions. I thought it would be interesting to the same thing with… Read More

By Tags: ,
9 Jul 2014

When Interest Rates Rise

With the Federal Reserve now unwinding their bond purchasing program known as quantitative easing, it’s likely that the Fed will start to raise short-term interest rates at the end of 2015 or the beginning of 2016 (assuming no new information). Now that we ‘know’ that the Fed will raise rates, what will happen when interest rates rise?  The short answer is that it depends.  I know that’s an unsatisfying answer,… Read More

By Tags: , , ,
3 Jun 2014

Do Hedge Funds Hedge?

Bloomberg News reported yesterday that the private equity giant KKR was closing down a hedge fund that they formed three years ago.  KKR is one of the largest and most successful private equity firms in the world, but they have struggled to find their way in other areas of the asset management business. The hedge fund, known as KKR Equity Strategies, wasn’t successful attracting assets with only 20 clients investing… Read More

By Tags: ,
16 Apr 2014

Are Small Caps Expensive?

The recent underperformance of small cap stocks has me wondering whether the outperformance that small cap stocks has enjoyed over the last decade could be coming to a close. Over the last ten years, the S&P 500 has gained 7.16 percent and the S&P 600 Small Cap Index has earned 9.81 percent a year, an outperformance of 2.65 percent per year.

By Tags: ,
11 Mar 2014

Which Stock Sector is Best?

A lot of our attention at Acropolis is focused on asset classes like US large or mid cap stocks, emerging markets or bonds.  We also spend a lot of time researching and trying to optimize strategies like value, momentum, size and quality. Another dimension that factors into our decision making process are stock sectors (bond sectors too, but I’ll save that for another day).  Within the S&P 500, there are… Read More

By Tags: , ,
21 Jan 2014

Acropolis vs Harvard Endowment

I didn’t apply to Harvard because I was certain that they would not admit me. My grades were fine and scores were so-so, but at that time they were accepting only nine or ten percent of applications and I knew that the other kids had top grades and scores AND were fluent in four languages, captain of multiple teams and fought poverty on the side. Or, worse yet, their parents… Read More

By Tags: , , ,
17 Jan 2014

How We Use Past Performance

Yesterday’s insight about the Morningstar Manager of the Year generated a lot of interest and feedback from readers.  Thank you!  I appreciate your replies and make it a point to respond to all of them. While we’re on the subject, I also want to thank you for completing the satisfaction survey that we sent 10 days ago. I am pleased to report that when you were asked whether you would… Read More

By Tags: , , ,