Monthly archives: July, 2011

Total return charts

According to this study, most popular financial websites provide return data and charts that does not include dividends or capital gains. As a result, investors and advisors using these sites for their research may be biased against income-generating assets.

(note: Kwanti Portfolio Lab always reports total returns, inclusive of income).


Commodities as a diversifier

In the past few years, the correlation between commodities and other asset classes has increased, calling into question the diversification benefits of commodity indexes.

An academic study suggest that the increased correlation is caused by the slew of ETFs and funds that now track commodities. With  access these products, passive investors buy and sell commodities as a homogenous block, as opposed to individual future contracts. As a result, fundamental supply and demand characteristics of individual commodities no longer matters. Consistent with this theory, the correlation of non-indexed commodities has remained close to its long term average.

Read more in this research summary.