Return-based style analysis is a statistical technique that helps investors understand the risk and return characteristics of their portfolios. It does this by looking at how often different stocks in your portfolio go up or down, irrespective of what other stocks are doing. The idea behind return-based style analysis is …

This is not to be confused with the equal-weighted ETF which has created a lot of buzz in recent months. Equal-weighting commodities can be risky because you are investing in assets that may have been undervalued or overvalued for extended periods of time, but this method does have its benefits …

A market capitalization-weighted index is an equity index that measures the performance of a selection of stocks from a particular region or market. The cap-weighted indexes are some of the most commonly used indices because they measure the relative size (or weight) of each company in the portfolio, and can …

The price-weighted stock index is a measure of the performance of the stocks that trade on major markets. The math of a simple price-weighted index is straightforward. In order to calculate the value, you need to sum up the share prices for each company in your portfolio and divide that …

Covered bonds are a type of debt instrument that is issued by a bank. These types of securities have two main features, which are: the issuer has pledged its assets to back up payments on the bond, and investors can buy these bonds at lower yields than other comparable instruments …

A collateralized loan obligation is a financial instrument that offers investors the chance to invest in the underlying assets of loans. CLOs are attractive because they offer higher yields than other types of investments like stocks or bonds. You may be wondering what exactly a collateralized loan obligation or CLO …

Investors can manage their overall portfolio risk by allocating their funds across a diversified range of asset classes. Usually, investors can mitigate most of these risks through planning. Sometimes, however, some risks may occur which are beyond prediction. These risks may cause severe implications for investors and adversely affect their …

The term embedded option refers to an option included in financial instruments that provides the issuer or holder with a right to perform some actions at a future time. However, this right does not obligate the issuer or holder to do so.  Embedded options can be a part of financial …

Smart beta and factor investing are two terms often used interchangeably. These are both investing strategies that investors may use. However, there are various factors that differentiate both these investing strategies. Before understanding how they differ, it is critical to look at what each of these is. What is Smart …

There has been an increased demand for businesses to conduct their operations in a socially responsible way. This demand comes due to an increased drive towards sustainability and considering the needs of society as a whole. The idea of socially responsible operations has also translated into the investing world through …