Daily Archives: Feb 12, 2021 at 07:14 pm EST

The ETF Portfolio Strategist: 12 Feb 2021

In this issue:

  • Stocks rise as Treasury yields tick higher
  • Is the tide finally turning in favor of global asset allocation?

Programming note: Starting with this issue, ETF-PS will separate reporting on our portfolio strategy benchmarks from the proprietary strategies, which will be updated in an upcoming issue.

Equities rally as the reflation trade starts to pinch bonds: US equities rose for a second week, based on Vanguard Total US Stock Market (VTI). The fund gained 1.7% at Friday’s close (Feb. 12), marking the first back-to-back weekly gain this year and propelling VTI to a new record high.

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Research Review | 12 February 2021 | Equity Factor Risk

Why Are High Exposures to Factor Betas Unlikely to Deliver Anticipated Returns?
Chris Brightman (Research Affiliates) et al.
January 11, 2021
By choosing investment strategies that intentionally create exposure to factor betas, investors may be obtaining uncompensated risks. We show across a wide variety of factors and geographical markets that factors constructed from fundamental characteristics have earned high returns, whereas those constructed from statistical betas have earned returns close to zero. When designing factor-based investment strategies, investors should seek exposure to the fundamental characteristics that define a factor and use statistical measures of factor betas to manage factor risks. Conversely, seeking to gain exposure to factor betas is a misguided means of obtaining the returns available from factor investing.

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Macro Briefing: 12 February 2021

* House committee approves Biden’s $1.9 trillion relief program
* Biden says US has new deals to secure 200 million more vaccine doses
* Vaccine rollouts are improving across the US
* Trump’s legal team’s defense begins today in Senate impeach trial
* Fed’s Daly expects central bank bond buying to continue through 2021
* Eurozone headed for political battle over sharply higher debt levels
* Pondering how tech innovations will unleash a surge in productivity\
* UK GDP fell a record 9.9% in 2020 but rebounded in December
* US jobless claims signal stronger pandemic-related headwinds: