What's the Risk?

In this episode of "What's the Risk" we take a look at the Fama French Australia Value Research Index. It is a research index from the Fama French model that tracks the performance of stocks with low price-to-book ratios.This index has data going back to 1975, so it's a valuable data set to measure the performance of value stocks in Australia against indices like the ASX 300. While our benchmark comparison is the ASX 300 for this video, we also take a look at Fama/French Australia Value against the Dimensional Australian Value Trust - Active ETF (net of fees), as Dimensional have spent considerable time using Fama & French's research.Want to learn more about investing? Search for "Your Investment Philosophy" on Amazon, Australian link: https://www.amazon.com.au/Your-Investment-Philosophy-Protecting-Fraudsters-ebook/dp/B0BCPJ8BGC/ https://www.mfg.com.au Mancell Financial Group is an Authorised Representative No. 226266 and Credit Representative No. 403187 of FYG Planners Pty Ltd, AFSL/ACL No. 224543. ABN 29 009 541 253. Hosted on Acast. See acast.com/privacy for more information.

In this episode of "What's the Risk?" we take a look at the historic performance of the S&P 500 Equal Weight NR Index AUD, which some investors may know is tracked by Betashares QUS ETF.Equal weight indices have become more topical as market cap weighted indices have shown increased concentration in a smaller number of companies at the top of the index. For some investors their instinct tells them that this needs to be avoided and they'd be much better in an equal weighted index fund. This belief can be backed up by long term data showing that equal weight indices outperforming their cap weighted counterparts.While over the long term equal weight indices have shown outperformance, every strategy has to be replicated in the wild successfully after costs and taxes. This is where equal weight strategies can run into problems.Want to learn more about investing? Get our Book: https://www.amazon.com.au/Your-Investment-Philosophy-Protecting-Fraudsters-ebook/dp/B0BCPJ8BGC/https://www.mfg.com.auMancell Financial Group is an Authorised Representative No. 226266 and Credit Representative No. 403187 of FYG Planners Pty Ltd, AFSL/ACL No. 224543. ABN 29 009 541 253. Hosted on Acast. See acast.com/privacy for more information.

In this episode of "What's the Risk?" we take a look at the historic performance of the MVIS Australia Equal Weight Index. Some people would know the ETF that seeks to track the performance of this index as Van Eck's MVW.Equal weight indices have become more topical as market cap weighted indices have shown increased concentration in a smaller number of companies at the top of the index. For some investors their instinct tells them that this needs to be avoided and they'd be much better in an equal weighted index fund. This belief can be backed up by long term data showing that equal weight indices outperforming their cap weighted counterparts.In regards to the MVIS Australia Equal Weight Index it's not quite what investors might expect, it's not 300 or even 200 of Australia's largest companies equally weighted, at the moment it's 75, so while investors may be avoiding concentration risk by using a product that tracks this index, they're not achieving broad diversification. As this index has outperformed a broader ASX over the longer term we consider some reasons for that, but we're slightly dubious on its equal weight characteristics. Either way, it's an interesting concept and we'll be looking at further equal weight indices in coming episodes.Want to learn more about investing? Get our Book: https://www.amazon.com.au/Your-Investment-Philosophy-Protecting-Fraudsters-ebook/dp/B0BCPJ8BGC/ https://www.mfg.com.au Mancell Financial Group is an Authorised Representative No. 226266 and Credit Representative No. 403187 of FYG Planners Pty Ltd, AFSL/ACL No. 224543. ABN 29 009 541 253. Hosted on Acast. See acast.com/privacy for more information.

In this episode of "What's the Risk", we take a look back at the 1970's. People may or may not know there was an oil embargo in the 1970's and a significant spike in the price of oil. There was also consistently high inflation, and a recession in the early to mid part of the decade.What did that mean for investing? Very simply there was a significant market downturn in 1973 & 1974, and it was very hard to achieve a return that bested inflation?What does that mean for today? Well we don't know, but we do look at the data available, considering size in the US along with value and profitability and find out could investors find an inflation beating return anywhere?Want to learn more about investing? Search for "Your Investment Philosophy" on Amazon, Australian link: https://www.amazon.com.au/Your-Investment-Philosophy-Protecting-Fraudsters-ebook/dp/B0BCPJ8BGC/ https://www.mfg.com.au Mancell Financial Group is an Authorised Representative No. 226266 and Credit Representative No. 403187 of FYG Planners Pty Ltd, AFSL/ACL No. 224543. ABN 29 009 541 253. Hosted on Acast. See acast.com/privacy for more information.

In this episode of "What's the Risk," we take a look at the Fama French US High Profitability Research Index. While the original Fama-French model focused on three factors, this index emerged from their 2015 research update which expanded the framework to five factors. Fama and French identified that stocks with higher operating profitability have historically delivered higher expected returns that were not fully explained by market, size, or price-to-book metrics alone.Fama and French define this profitability by looking at a firm's operating income. Specifically, they calculate it by taking total revenue and subtracting the cost of goods sold, selling, general and administrative expenses, and interest expense, then dividing that figure by book equity. This process allows the index to filter for firms with "robust" internal earnings power, distinguishing them from "weak" firms that struggle to generate the same level of efficiency. By focusing on these high-margin businesses, the index seeks to isolate a specific dimension of stock returns that has persisted across different eras and markets.While the Fama French US High Profitability Research Index is not an investible index, the research by Fama and French continues to inform the methodology of Dimensional Fund Advisors, where Fama and French serve as board members.Want to learn more about investing? Search for "Your Investment Philosophy" on Amazon, Australian link: https://www.amazon.com.au/Your-Investment-Philosophy-Protecting-Fraudsters-ebook/dp/B0BCPJ8BGC/ https://www.mfg.com.au Mancell Financial Group is an Authorised Representative No. 226266 and Credit Representative No. 403187 of FYG Planners Pty Ltd, AFSL/ACL No. 224543. ABN 29 009 541 253. Hosted on Acast. See acast.com/privacy for more information.