Using Style Index Momentum to Generate Alpha

Russell style indexes exhibit significant momentum, particularly after medium term out- and under performance. The existence of this momentum produces a diversified, index-based low-cost means to exploit momentum by incorporating relative style index performance into tactical allocation strategies. Such style index momentum trading strategies have outperformed on both a raw and risk adjusted return basis, with the long minus short portfolio generating an average 9.25% annual return over the 34-year period analyzed.

What’s Wrong with Target Date Funds?

Let me count the ways…What are they? Target Date or Retirement Date Funds (TDF) are used by 401(k) retirement accounts for participants that either didn’t know how, or didn’t want to bother with creating their own retirement portfolio. The concept is simple. Let an investment company, like Fidelity for example, create model investment portfolios for investors using their own mutual funds based on when the investor plans on retiring. So if you are 40 years old, plan to retire at 65 you would pick a 2035 Target or Retirement date fund.