Tag: Diversification
-
The World’s Largest Asset Class, and How to Think About It
In previous blogs, we looked at bonds and stocks as asset classes. We developed an approach based on return factors and return correlations to decide which asset classes should be considered by most investors. In this post, we look at real estate. However, unlike the case with stocks and bonds,…
-
Should Country Be an Explanatory Factor in Investing?
In previous posts, we looked at a number of explanatory “factors” which may explain the returns on stocks. But there’s one variable we didn’t discuss. For some reason, in the factor literature, the country of a stock is rarely considered to be a “factor.” But in practice, most investors do…
-
What Is an Asset Class? A Closer Look at a Common but Vague Term
How would you answer the question, “What is an asset class?” This sounds like a simple question, but it turns out that even large institutions struggle to provide a well-defined answer. In this post, we’ll discuss why it matters and how to define an “asset class.” The Tangency Portfolio and…