elstonviews

In the search for yield, UK Equity Income is a key component of client portfolios. There are a number of UK Equity Income ETFs to choose from, each tracking a different methodology. This study looks at the different index methodologies’ impact on Sector Allocation for investors that focus on the business cycle. UK Equity Income ETF Choices Investors have a choice of UK Equity Income index strategies, each with different risk-return characteristics, weightings methodologies and factor tilts. Portfolio managers and advisers considering a UK Equity Income ETF should understand the differences of each to inform their selection process. In the first of a series of studies of this key sector, we have done a sector analysis of London-listed UK Equity Income ETFs, to understand their inherent characteristics relative to the UK main equity index, the FTSE 100. For these studies, we have analysed the indices and ETFs detailed in Fig.1. Fig. 1: UK Equity Income Indices & ETFs...

After equal measures of anticipation and fear, Vanguard has finally unveiled its D2C offer for the UK retail market.  Advisers should celebrate.  Sounds contradictory? Not at all. What’s being offered Firstly, a quick look at what is being offered.  Vanguard is offering direct access to its funds through with the option of holding them through an ISA or JISA, with a SIPP to follow. Of most of interest (or rather for most ease), from a consumer perspective, will be the “do it for me” type of asset allocation funds that provide an entire portfolio management solution within a single fund.  Specifically, the target risk funds, known as the Vanguard LifeStrategy funds, (with a fixed allocation to equity, e.g. 60% equity), and the target date funds, known as the Vanguard Target Retirement Funds (with a target date to match expected retirement date). For these portfolio management funds, the OCF is, for example, 0.22% (the Vanguard LifeStrategy 6...

Commerzbank launches a certificate that tracks Elston’s multi-asset Minimum Volatility Index to provide a “Liquid Alternative” investment strategy The index was launched in December 2014 and has a two year track record The strategy has delivered on its target of providing diversified, differentiated returns with minimised portfolio volatility MEDIA RELEASE 3 rd March 2017 ETF specialist Elston Consulting announces today that is has successfully licensed its Elston Strategic Beta Global Minimum Volatility index (ticker ESBGMV) to Commerzbank for the creation of an investable certificate that tracks this innovative index.  The certificate is issued with an initial notional of £10m. Whereas most Min Volatility indices relate to a single asset class such as Global Equities, Elston’s approach was to launch an index that targeted the minimum volatility portfolio created from a globally diversified range of asset classes represented by low cost iShares® exchange ...

Whilst advisers and investments are comfortable and familiar with the simple term “funds” (has anyone heard of an “CIS (Collective Investment Scheme) Conference” or being an “AUT (Authorised Unit Trust) investor”?  There is much less familiarity with the once-institutional and now pervasive ETFs (Exchange Trade Funds).  That lack of familiarity means that for some reason that particular TLA has stuck. Claer Barrett in FT Weekend’s FT Money section tries to demystify the jargon  – but ends up makes thing sound more complicated than they need to be. Advisers wanting to check or brush up on the difference between an ETP, ETF, ETN and ETC could do well to invest 2 hours of their time to earn accredited CPD (Continuous Professional Development) from the roadshow being run by Copia Capital Management to get a solid understanding of this increasingly popular and pervasive investment vehicle. As for civilians – customers and investors – it's actually quite simpl...

John Authers’ Long View article in the FT this weekend addresses market timing.  While he claims that just passive investors are such bad timers, we would go further: most are. Attempts to time the market (choosing the right moment to buy or sell into risk assets) are a mug’s game.  Great for brokerages that delight in investors’ fees levied to senselessly overtrade.  Bad for investor’s portfolio outcomes.  Despite the annual survey by Dalbar that investors’ attempts to time the market is really bad for their portfolio, people – including some portfolio managers – still try and have a go. The problem is that in timing the market, we become slaves to our behavioural biases around entry points, and the noise around market sentiment.  An investor fearing Brexit might have – out of emotion – sold everything to cash stocked up on gold sovereigns and run for the hills whilst tracing Irish ancestry.  The smart thing was to acknowledge sterling weakn...

2016 outcomes for our multi-asset Max Sharpe and Min Volatility did what they say on the tin. Dynamic risk-based strategies can provide low correlation differentiated returns to provide a low-cost, liquid alternative to traditional "Alternatives" A quant-based approach to alternative investing is likely to be cheaper and smarter than hedge funds which are vulnerable to manager's behavioural and emotional biases Smart beta strategies are “smart” because they take a scientific, quantitative and objective approach to investing by combining a range of index-tracking ETFs with different market risk or “beta” exposures. In contrast to the opacity of hedge funds, dynamic allocation “smart beta” investment strategies should do what they say on the tin. Elston runs a number of diversified multi-asset investment strategies, two of which have been offered as indices for asset owners and investment managers to benchmark against or track. Chart 1: Risk and R...