|
Shifting Landscape In 2007
Lipper and Co. is out with estimates on 2007 fund performance, and the tune is a simple one: The times are changing. After years of small-cap and value outperformance, large-cap and growth funds were the highlights of the year, according to Lipper. Lipper said that the best-performing fund style box for 2007 is mid-cap growth, with the average fund delivering a 17.0 percent return. Large-cap growth came in second, with a 14.9 percent result, followed by small-cap growth at 9.4 percent. On the flip side were large-cap value at 2.7 percent, mid-cap value at 2.4 percent and small-cap value with a loss of 4.9 percent. The nearly 22 percent swing between mid-cap growth and small-cap value is the largest swing between two growth/value segments since the tech bubble.
MSCI Launches Frontier Indexes
Fresh off its initial public offering, MSCI became the latest index company to move into the suddenly red-hot market for ''frontier indexes.'' Frontier indexes are the next step beyond emerging markets in the development spectrum, and represent the outer reaches of modern capital markets. Investors have been increasingly looking toward these markets as they seek out new and better sources of diversification. The launch of the new MSCI Frontier Market Indices came after MSCI put out a consultation paper in 2007 seeking input on how best to construct a family of frontier indexes. The new family currently covers 19 markets, such as Kenya, Bulgaria and Vietnam. Currently, the only other major index provider with a full family of frontier market indexes is S&P, which has been in the space for several years. At the same time, MSCI has also launched the MSCI Asia APEX 50 Index. The index is a blue-chip index specifically designed to underlie investment products. It includes 50 of the largest stocks in terms of market capitalization in the Asia ex-Japan region. The index is a subset of the MSCI AC Asia ex-Japan Index and is optimized for tradability and minimal tracking error with its benchmark index.
Markit Makes Its Mark
Markit Group Limited recently made two index acquisitions, bringing some consolidation to the suddenly popular credit derivative index industry. The data vendor completed the acquisition of International Index Company (IIC), the provider of the iTraxx credit derivative indexes and the iBOXX family of bond indexes, in November. Before the end of 2007, Markit was to have completed the acquisition of a second index provider—CDS IndexCo LLC, the provider of the CDX credit derivative indexes and a family of synthetic structured finance and loan indexes.
The acquisitions mean the two best-known index families covering credit derivatives will be brought under the same roof. While the iTraxx family mainly covers Europe and Asia, the CDX family's coverage includes emerging markets and North America. Credit indexes have gained rapid prominence since the start of the credit crunch in 2007.
NASDAQ-100 Rebalances
The NASDAQ Stock Market's annual additions and deletions to the NASDAQ-100 Index became effective as of December 24, 2007. The popular index captures the largest 100 nonfinancial stocks trading on the NASDAQ Stock Market by market capitalization, and serves as the basis for the $21 billion PowerShares NASDAQ-100 ETF (NDAQ: QQQQ). This year, five companies are moving out of the index and five companies are moving in. The companies to be removed include LM Ericsson Telephone Company (ERIC), Patterson-UTI Energy Inc. (PTEN), Ross Stores Inc. (ROST), Sepracor Inc. (SEPR) and XM Satellite Radio Holdings Inc. (XMSR). They were replaced by Hologic Inc. (HOLX), which targets women's health care needs; Focus Media Holding Ltd. (FMCN), a Chinese digital media company; Hansen Natural Corp. (HANS), a beverage company; Steel Dynamics Inc. (STLD), which operates in the steel industry; and Stericycle Inc. (SRCL), a medical waste management company.
FTSE Indexes Screen Out Terror
Sudan, Syria, Iran and North Korea have been identified by the U.S. government as sponsors of terror, and pension funds are increasingly backing away from companies that have business ties to those four countries—whether by choice or because of divestment legislation. FTSE and independent research provider Conflict Securities Advisory Group (CSAG) have partnered to create indexes that screen out companies that do business in or with the four targeted countries. The FTSE/CSAG Terror-Free Index Series will be launched in 2008. Currently, screened versions of the FTSE All World ex-US Index, the FTSE All World Developed ex-US Index and the FTSE Emerging Markets Index are planned. It is not yet known how many companies will be excluded because of the screening process, but the CSAG Web site puts the number of companies in the U.S. and abroad with business ties to terror-sponsoring countries at approximately 400.
S&P 500 Gets A Doppelganger
Early this year, S&P announced the launch of the S&P 500 Inverse Index, becoming the first index provider to step into the inverse and leveraged arena. The index tracks the returns of a short position in the S&P 500 Index; more accurately, it tracks the inverse of the S&P 500's total return. Although borrowing costs are not included in the index, it does incorporate the effect of interest earned on the investment and on the profits from the short selling of the components of the S&P 500. The index is designed as a benchmark by which to measure the performance of inverse funds; it can also be used as the basis for investable products. S&P says more inverse indexes are on the way, as well as leveraged indexes.
S&P's Mega-Green Index
S&P launched a new thematic index in January targeting the fast-growing market for eco-friendly businesses. The new S&P Global Eco Index is a kind of mega-thematic index, pulling together 30 components from other indexes within S&P's global thematic index series. The index features companies from a variety of industry clusters—the S&P Global Clean Energy Index, S&P Global Timber & Forestry Index, the S&P Global Water Index and the S&P/Citigroup Global Environmental Services Sector Index. The index chooses the five largest companies that come close to being a pure-play within each industry segment. Currently it includes components from 12 countries.
Case-Shiller Benchmarks Fall In October
Residential real estate took another hit in October, according to the Standard & Poor's/Case-Shiller Home Price Indexes. The 10-City Composite Index was down 6.7 percent on an annual basis for October, breaking its previous record of a 6.1 percent annual decline in April 1991. Meanwhile, the 20-City Composite Index was down 6.1 percent on an annual basis for October—almost as much as the 10-City Composite Index. Only three of the 20 metropolitan areas showed positive annual returns in October, and it was also the second consecutive month in which all 20 metropolitan areas were down on a mont-over-month basis. October 2007 was the 10th consecutive month of negative returns for the S&P/Case- Shiller Home Price Indexes and the 23rd month of decelerating returns, according to S&P.
S&P Expands Case-Shiller Indexes
S&P has expanded the S&P/ Case-Shiller Home Price Indexes to include subindexes for low-, mid- and high-priced homes. Seventeen of the 20 metropolitan areas covered by the S&P/Case-Shiller Home Price Indexes now have their own subindexes. Each tier represents roughly one-third of the total sales. A house's price range is determined by its first sale price in any given sale pair. A sale pair results when a home is resold and its previous price is matched to its most recent price. S&P is also publishing the number of sale pairs at the time of calculation for each metro area index and the composite indexes.
|
2008
