Academic Finance Research and Insights

U.S. Companies Have Outperformed Japanese Companies, or Have They?

By |June 28th, 2024|Empirical Methods, Larry Swedroe, Research Insights, Guest Posts, Other Insights, Value Investing Research|

While both the S&P 500 and the Nikkei indices have recently hit all-time highs, the valuation and balance sheet data we have reviewed indicate that the downside risks in Japanese stocks appear to be far less than the risks in U.S. stocks. Evidence such as this helps explain why legendary investor Warren Buffett has been buying Japanese stocks.

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Smart rebalancing for factor strategies

By |June 24th, 2024|Transaction Costs, Empirical Methods, Research Insights, Factor Investing, Basilico and Johnsen, Academic Research Insight, AI and Machine Learning|

Trading costs, discontinuous trading, missed trades, and other frictions, along with asset management fees can cause a shortfall between live and paper portfolios. The focus of this paper is to test an effective rebalancing method that prioritizes trades with the strongest signals to capture more of the factor premia while reducing turnover and trading costs.

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Private Equity May Not Be the Diversifier We Think (Due to Volatility Laundering), But Private Credit Could Be

By |June 14th, 2024|Private Equity, Research Insights, Larry Swedroe, Other Insights|

Volatility laundering causes the risk-adjusted returns and the diversification benefits of private equity to be significantly overstated. However, the problem of volatility laundering is not a problem for all private investments, specifically not for high-quality, floating rate, private credit.    

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The Halo Effect Drives Demand for Sustainable and Impact Investments

By |June 7th, 2024|ESG, Research Insights, Larry Swedroe, Other Insights|

Both investment motives and investment experience are important determinants for investors’ ability to assess (impact) investment opportunities. While investor preference can justify accepting a lower return as the cost of expressing their values, the halo effect should not play a role in making that assessment—both economic theory and empirical evidence should lead investors to expect lower returns on sustainable investments.

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