elstonviews

In the search for yield, UK Equity Income is a key component of client portfolios. There are a number of London-listed UK Equity Income ETFs to choose from, each tracking a different index methodology. This report looks at the best performing UK Equity Income indices in absolute and risk-adjusted terms for GBP investors. UK Equity Income Indices Investors have a choice of UK Equity Income index strategies, each with different risk-return characteristics, weightings methodologies and factor tilts. These difference influence the performance of each index strategy (all figures below are on a total return basis for GBP investors). Best performing for 2017 The best performing strategies for UK Equity Income in 2017 were: +12.3% total return of the MSCI UK Select Quality Yield index (tracked by BMO MSCI UK Income Leaders ETF (LON:ZILK))  +8.7% total return of the FTSE 350 ex Investment Trust Qual/Vol/Yield Factor 5% Capped Index (tracked by Lyxor FTSE UK Quality Low Vol ...

We look at the different factor versions of World Equity indices to see which factors won in 2017. World Equity Momentum factor delivered highest 1Y total return at +20.57% World Equity Momentum factor delivered highest 1Y risk-adjused return with Sharpe ratio of 1.94 Focus on market cap indices is a choice, not an obligation A market cap weighted approach has well known drawbacks: it biases larger companies, regardless of efficiency and is "procyclical" - buying larger amounts of more expensively valued companies. This is a critique of "passive investing". We don't believe there's such a thing as passive investing. There is index investing and non-index investing. There is subjective investing and systematic investing. Choice of index, choice of methodology, choice of asset allocation are all active decisions. Index investing simply delivers the desired investment approach in a way that is efficient, transparent and cheap. Factor-based indices ...

Investors were amply rewarded for risk-taking in 2017, with recovering growth, supportive liquidity, prospective tax cuts and lower interest rates all supporting higher valuations. These fundamentals, combined with a significant decline in market volatility led to a strong year for markets with equity markets at record highs Portfolio positioning for asset allocation remains key and we refresh the risk-return characteristics of each asset class for GBP investors. For historic and expected asset class risk-return perspectives, see below. Fig. 1: 1-year historic asset class risk-return for GBP investors Fig. 2: 3-year historic asset class risk-return for GBP investors Fig. 3: 5-year expected asset class risk-return for GBP investors Source: Blackrock Investment Institute, total returns basis (arithmetic) for GBP investors NOTICES: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.  I wrote this artic...