AAII Survey: Retail Investors Split as to Whether Value Premium Still Exists

In investing, value premium refers to the greater risk-adjusted return of value stocks over growth stocks. Eugene Fama and Kenneth French first identified the premium in 1992, using a measure they called HML (high book-to-market ratio minus low book-to-market ratio) to measure equity returns based on valuation. In effect, they found that stocks with low price-to-book-value ratios performed better than stocks with high price-to-book-value ratios,…

 

How Much Small Cap Should Be in Your Portfolio?

This article originally appeared in the July 2014 issue of the AAII Journal. It may come as a surprise to those who have placed their nest eggs in an S&P 500 index fund, or an actively managed version thereof, that they are actually making a decision to exclude a significant portion of the equity universe. Academic…

 

How to Measure the Skills of Your Fund Manager

According to the Investment Company Institute’s Fact Book, in 2015, there were over 16,000 mutual funds, closed-end funds and exchange-traded funds. This is more than the current number of stocks listed on the NASDAQ, NYSE and Amex exchanges. [Editor’s note: As of January 31, 2017, there were over 4,700 stocks listed on the major exchanges…