An All-Cap Core investment approach expands equity opportunities to include all levels of market capitalization and the range of style classifications. Rather than a constrained focus on a limited area of the investment universe, an All-Cap Core approach allows for flexibility to pursue the most attractive opportunities, no matter where they fall within the predetermined style spectrum.
The institutional investment community often uses specific style boxes as helpful tools to compare manager performance and build diversified portfolios, yet an All-Cap and/or Core (also referred to as Blend) outlook can offer a valuable investment philosophy despite not fitting neatly into a style or capitalization box. Within this article, we present four main potential issues with narrow style classifications:
So far this earnings season, 120+ companies have released their quarterly numbers. As shown below, the average stock that has reported thus far has declined 0.01% on its report day, which is essentially flat. (For companies that report before the open, we use that day's change. For companies that report after the close, we use the next day's change.) Energy and Health Care stocks that have reported have done exceptionally well, averaging gains of more than 1% on the day they release numbers. Consumer Discretionary and Technology stocks, on the other hand, have averaged declines on their report days.
Below is a list of the stocks that have reacted the most positively to their earnings reports this season. As shown, Super Micro Computer (SMCI) ranks at the top with a one-day gain of 21.62% on its report day. Ironwood Pharma (IRWD) ranks second with a one-day gain of 16.51%, followed
One of the oldest and most common ways to classify stocks is by size. Size is usually measured by market capitalization - the total value of all outstanding shares of a stock. Conventional wisdom holds that smaller stocks offer higher returns but more risk when compared to larger stocks. In this article I will use data from Ken French's website to examine the relationship between size and performance, and then look at some index-based ETFs from a size perspective.
French's data covers US stocks from July 1926 through the present, currently November 2013. He sorts firms based on market equity, aka market capitalization, at the end of June of each year, then groups stocks of similar sizes into portfolios. For what follows, I will look at the portfolios constructed by arranging stocks into ten different groups, or deciles. (They are not literally deciles; the breakpoints are formed using only