Wealth Manager

March 2007

Monte Carlo Analysis Boasts a Growing Audience and Evolving Software, But the Old Fundamental Challenges Still Apply.

By James Picerno

Monte Carlo analysis isn’t a commodity service in finance,
but it’s getting there.

A decade ago, virtually no one used Monte Carlo for evaluating
client portfolios. Technology, of course, was one obstacle.
Simulating an array of possible portfolio results demanded more
computing power than the average PC could deliver in the mid-
1990s. No matter, since few wealth managers at the time understood
the finer points of Monte Carlo and how it could enhance
portfolio risk analysis.

March 2007

New ETFs from State Street and Vanguard deliver all foreign stocks in one fund.

By James Picerno

ETF launches have become routine in The 21st century, especially
when it comes to targeting ever narrower slices of the capital markets.
But two new ETFs are bucking the trend on the foreign-equities front.
State Street Global Advisors launched an ETF in January that
delivers the world’s foreign equities in one portfolio tracking a
broad, capitalization-weighted index. Vanguard is set to roll out
a competing ETF, and may have already done so by the time you
read this. Although there are mutual funds holding foreign developed-
and emerging-market equities in one portfolio, putting all
non-U.S. stocks in one product is an idea that has eluded ETFs. No
longer, thanks to State Street’s newly minted SPDR MSCI All Country
World Index ex-USA (Amex: CWI) and the pending Vanguard
FTSE All-World ex-USA.