Equity outlook: Smooth sailing or a roller coaster ride?

Three reasons equity market volatility could tick upward sooner rather than later

Nick KalivasStocks are on a remarkable run, which has kept equity market volatility largely contained thus far in 2017. In fact, volatility, as measured by the CBOE Volatility Index (VIX), is currently at 8.84 — its lowest level since the index was first published in 1993.1 Moreover, the calendar-year high/low range for VIX is the narrowest since 1995.1


What’s in your index?

Smart beta strategies have the potential to help mitigate sector risk

Nick KalivasMany investors are attracted to market-cap-weighted benchmark-index-based exchange-traded funds (ETFs), with the objective of obtaining stock market exposure at a low cost.1 As proof, investors have poured $70.8 billion into four broad-market-index-based ETFs over the past the year-and-a-half through June 2017.2 In their quest for low-cost equity exposure, however, investors may be overlooking some of the inherent features of market-cap investing that can lead to overweighting a sector when it falls out of favor. The bursting of the technology bubble in 2000, the financial crisis of 2008 and the oil crash of 2014–2015 provide prime examples.

Sector bets and the effects of market-cap investing

When choosing a strategy


What to make of the US dollar’s doldrums?

Today’s weak dollar has the potential to spark higher interest rates and ignite commodities

While the dollar moved higher against global currencies in 2014 and 2015, headlines touting the dollar’s strength continued long after its price trend flattened out. Since then, the Federal Reserve adopted tighter monetary policy, leading many market prognosticators to predict a renewed rise in the US dollar. I was not among them.

In fact, it has been my contention for nearly two years that


Are smart beta ETFs skewing stock valuations?

An analysis of ownership data suggests that ETFs are not the market disrupters they’re portrayed to be

Thanks in large part to the popularity of smart beta and factor-based strategies, adoption of exchange-traded funds (ETFs) has grown rapidly in recent years. Some have even speculated that the growth of ETFs is skewing the valuations of certain stocks. I do not believe that is the case. Below, I explain why.

Is the popularity of ETFs affecting single-stock ownership?


Which factors topped the list in the second quarter of 2017?

Growth and momentum strategies continue their comeback stories

Nick Kalivas

Growth and momentum again topped factor performance in the second quarter of 2017, with smaller-cap versions of both factors outpacing their large-cap counterparts. Growth stocks were in such favor during the quarter that the Russell 2000 Pure Growth Index and Russell MidCap Pure Growth Index were the two best performers, despite the fact that small- and mid-cap stocks as a whole lagged the broader market, as represented by the S&P 500 Index.

Factor leadership can vary from quarter to quarter, depending on market conditions and economic trends. Growth began its comeback in the first quarter of 2017 as the outlook for robust fiscal stimulus, in the form of tax cuts and infrastructure spending, faded. The small- and mid-cap value, dividend and high beta factors lagged during this time — weighed down by weakness in commodity prices and diminishing growth prospects.

More factors outperformed the broad market this quarter, with 12 factor indexes outpacing


Time to take the temperature of pharmaceutical shares?

Three reasons pharma stocks appear to be on the mend

Nick KalivasThe pharmaceutical industry has lagged in recent years, due in part to political uncertainty, which has kept a lid on company share prices. Provided lawmakers can produce the votes, the proposed House and Senate health care bills could ease some of that uncertainty — setting up a possible “sell the rumor, buy the fact” backdrop, as investors move beyond market noise and focus on company fundamentals. With uncertainty already priced in, I believe that the pharmaceutical industry could finally be poised for a breakthrough if current trends hold.

Here are three potential industry catalysts: