Dr. Harry Markowitz Honored by Loring Ward

blog_harry_awardLoring Ward today awarded Dr. Harry Markowitz its Heritage Award at the firm’s National Education Conference in San Diego. Markowitz, best known for winning the Nobel Prize in Economic Sciences in 1990 for his work on portfolio selection, has served on Loring Ward’s Investment Committee since 2010.
According to Loring Ward’s CEO, Alex Potts, “Our firm has drawn on the research and powerful insights of many leading academics to build our Asset Class Investing portfolios, but no one has had a larger and more wide ranging impact than Dr. Markowitz. We are so privileged to be able to honor his lifetime of contributions to financial services, and to recognize his impact on millions of investors.”
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Evaluating Factors of Expected Return

Blog_Evaluating_FactorsThis blog is the first in a four-part series on factors of return.
Research has identified approximately 316 new factors in the academic literature from 1964 through 20131, so how can we be sure that the factors above are the ones we should be using to construct our portfolios?
To review, factors are independent variables in an equation, or model, which help to explain asset prices. In the seminal Fama-French three factor asset pricing model, the three variables, or factors, are the market premium, the small premium and the value premium. These premiums are represented in the model as follows:
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Rolling the Dice on Return Premiums

Past performance does not guarantee future results.

Past performance does not guarantee future results.

This blog is from the January issue of Portfolio Perspectives.
Test your knowledge of probability: If I’m rolling two standard six-sided dice and you’re picking the outcome (the sum of the two dice, any number between 2 and 12), what number do you pick?
If you’ve taken statistics or played many dice games, your strategy is to pick 7 because 7 is the most likely outcome. There are actually six different ways to roll a 7: 1+6, 2+5, 3+4, 4+3, 5+2, 6+1. That’s more than any other number. Continue reading

Loring Ward’s Framework for Performance Measurement and Monitoring

The Loring Ward Investment Committee’s performance monitoring process allows the Investment Committee and Advisors to understand the drivers of performance for our model portfolios. To evaluate the risk and return of our model portfolios, Loring Ward employs a four-step process, which is discussed by Michael McMillan, CFA, in his blog “Performance Measurement: The What, Why, and How of the Investment Management Process”:

  1. Benchmark Selection
  2. Excess Return Calculation
  3. Performance Attribution
  4. Risk Analysis1

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Window Dressing

Source: “Corporate Bond Market Transaction Costs and Transparency,” Edwards, Harris, Piwowar. The Journal of Finance, Volume 62, Issue 3, June 2007.
Are you using individual bonds to differentiate your portfolio offering for affluent investors? Many advisors do, often citing liability matching and taxes as the main justifications for such a strategy. Although, I don’t argue there may be cases where individual bonds make sense for a client, I believe it is important to consider the tradeoffs of using individual bonds vs. a bond mutual fund before making that decision. Below I’ve summarized the key points to consider when deciding between an individual bond and bond mutual fund strategy.
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