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Equity Analysis and Market Strategy

Top Thought Leadership Articles on Equity Investing

We are living and investing through times of heightened volatility. Whilst fixed income investors pore over the latest central bank meeting minutes for clues, those with eyes on the equity market would be wise to arm themselves with more than just the latest data. History can be an important bellwether for stocks, and there is much theory and analysis on more recent market features which investors will benefit from understanding.

Robeco’s study leads our selection, presenting insights from an examination of 61 years of equity valuation and characteristic data. There are papers on equity factors, including an outstanding piece from PMR on systematic value investing, and an intuitive video from SSGA covering momentum. Also covered is index concentration, which has been a cause of concern for many. Finally, don’t miss Dimensional Fund Advisors on weighting schemes in systematic equity, and a CFA Institute paper on the ever-popular stock buyback.

equity analysis

The Cross-Section of Stock Returns Before 1926, and Beyond (Robeco)

This comprehensive study of historical equity returns uses stock prices, dividends and market capitalisations on nearly 1,500 stocks between 1866 and 1926. Some fascinating conclusions are detailed as well as a cross-comparison with factor performance after 1926.

Weighing the Risks of a Top-heavy Market (Intech, Feb 2022)

For compliance reasons, this paper is only accessible in certain geographies

Could U.S. cap-weighted indices be suffering from a lack of diversification? Investors may want to revisit their mega-cap allocation having read this piece, with a skewed market cap distribution curve and bloated valuations acting as warning signs.

Systematic Equity Weighting Scheme Design (Dimensional Fund Advisors, Feb 2022)

Market prices are held up as a key input when constructing systematic equity weighting schemes. Different weighting schemes are examined as part of this study to show which is most effective at risk mitigation, cost efficiency, and investor satisfaction.

Value, Growth, and Intangible Assets (Franklin Templeton Investments, Jan 2022)

For compliance reasons, this paper is only accessible in the EMEA region

This paper defines intangible assets and talks through their growing importance. The authors argue that, within current standards, they are not properly accounted for, and if they were there would be significant impact on value and growth classifications.

Stock Buyback Motivations and Consequences: A review (CFA Institute, 2022)

Public companies are using share buybacks as the primary mechanism for paying out to shareholders. Once rarely used, buybacks now amount to hundreds of billions of dollars each year. This CFA Institute paper is a review of academic literature on the subject.

Equity Convexity and Unconventional Monetary Policy (Amundi)

For compliance reasons, this paper is NOT accessible in the United States

Amundi aims to show the particular importance of stock convexity exposure in an environment of monetary policy normalisation. Targeting better risk adjusted returns, they aim to predict convexity premium dynamics to design a systematic long convexity strategy.

Is Systematic Value Investing Dead? (PMR)

Responding to the narrative that value investing may have expired, the authors put forward the case for fundamentals continuing to have relevance when selecting securities. They also address criticisms that have been brought against value investing.

Video: Equity Momentum – Theory and practice (State Street)

This video scrutinises the momentum factor. It first presents the results of historical data research of the S&P 500 over the last 25 years, before providing a more strategic view on momentum and how it relates to the market outlook.

Sector Concentration and Index Weighting (S&P Dow Jones Indices, Feb 2022)

With unease about the level of concentration in cap-weighted indices once again a hot topic, the authors present a different way to gauge concentration by modifying the Herfindahl-Hirschman Index (HHI) to consider the number of names in a sector.

The Equity Cycle and the Anatomy of a Bear Market (Bridgewater Associates, 2022)

With central banks having clearly signposted rate hikes and balance sheet unwinding it is important to comprehend how the equity market may respond by looking at the equity cycle, the root causes of an equity bear market, and how to navigate through.

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