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Home Price Index Sees Upturn
The second-quarter 2009 data on the S&P/Case-Shiller Home Price indexes indicate that the quarterly U.S. National Home Price Index has seen its first quarterly increase in three years, at 2.9 percent. The index was down by 14.9 percent on an annual basis.
At the same time, the monthly composite indexes recorded positive returns for the second consecutive month, with the 10-city composite and 20-city composite both up 1.4 percent in June on top of 0.5 percent increases in May. They were down 15.1 percent and 15.4 percent, respectively, over the one-year period. Like the national index, the composite indexes were up from record declines of more than 19 percent reached earlier this year.
Among the best-performing cities were Cleveland, up 4.2 percent for June; San Francisco, up 3.8 percent; and Minneapolis, up 3.1 percent. Only two cities were in negative territory for the month: Las Vegas and Detroit, down 2 percent and 0.8 percent, respectively.
S&P Changes U.S. Liquidity Requirements
Standard & Poor’s updated its liquidity requirements for its U.S. indexes in August. It measures liquidity mainly by the ratio of annual dollar value traded to float-adjusted market capitalization. As of Aug. 18, the minimum ratio for the S&P 500, S&P MidCap 400 and S&P SmallCap 600 is now set at 1.00. Previously, the threshold was set at a ratio of 0.30, or 30 percent. Companies must also trade at least 250,000 shares on a monthly basis during the prior six-month period.
The liquidity threshold for the broader S&P Total Market Index, which comprises the S&P 500 and the S&P Completion Index, remains at 10 percent.
SPIVA Says Indexing Still Outperforms … Sort Of
August saw the release of S&P’s Index Versus Active Fund Scorecard, or SPIVA, for the first half of 2009. And the word is, the indexes continue to outperform active management—from a certain angle.
From an absolute numbers perspective, the S&P MidCap 400 showed the most impressive performance, outperforming 73.4 percent of mid-cap mutual funds over the five-year period ending June 30, 2009. The S&P 500 had a 62.9 percent outperformance rate, while the S&P SmallCap 600 beat 57.4 percent of active managers.
But when you review the performance from an asset-weighted perspective, active managers actually did well. In fact, they either tied or outperformed indexes over the trailing five years in every asset class except domestic mid-cap and emerging markets. This would indicate that investors put the lion’s share of their assets to work with outperforming managers over the past five years, something indexing proponents say is difficult to do effectively. Or, as some have suggested, this could be a statistical fluke.
The story is quite a bit different for fixed income—an area where many active-management proponents say indexing is a losing proposition. The indexes outperformed more than 75 percent of active managers in almost every subgroup during the five-year period, with the figures at or near 100 percent for long government bonds, mortgage-backed securities and New York and California municipal debt. Interestingly, the sole exception was emerging market debt, where more than half of all active managers outperformed their benchmark. The asset-weighted figures produced similar results.
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2009
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