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Why Most Active Managers Often Fall Short

A recent study by Morningstar that was discussed in a Wall Street Journal article by Sam Mamudi entitled, "Active Management Loses in Risk Study," added further fuel to the fire of the ongoing debate over the merits of active and passive investment management strategies. As a reminder, active investment strategies generally attempt to outperform their associated benchmark indexes while passive investment strategies generally attempt to track, or stay in line with, their associated benchmark indexes. While it has widely been established that active mutual fund managers generally underperform their benchmark indices, the Morningstar study goes further to conclude that, on a risk adjusted basis, even more active mutual fund managers fall short. Specifically, the Morningstar study found that over the past three years, only 37% of actively managed mutual funds outperformed their associated Morningstar indexes on a risk, size and style adjusted basis. Put differently, 63% of actively managed mutual funds underperformed their associated Morningstar indexes over the past three years on these terms. The results were similar over five and ten year timeframes ... Read More

Is the Consumer Starting to Wage a Comeback?

August retail sales soared far higher than expected, rising 2.7% during the month. Backing out the impact of the "cash for clunkers" program, retail sales, excluding autos, still rose by 1.1%. The overall gain, led by a 10.6% growth at auto dealers, was the strongest month over month gain since January 2006. The most positive aspect of these reports, in our view at Hennion & Walsh, was the strength observed in the traditional "back to school" segments such as department, apparel, sporting goods and hobby stores. While these are sequential gains and retail sales are still off last year's pace by approximately 5%, this data suggests there may be upside surprise potential for retail sales during the 2009 Holiday season ... Read More

Hennion & Walsh CIO, Kevin Mahn quoted in the Wall Street Journa

Hennion & Walsh CIO, Kevin Mahn quoted in the Wall Street Journal ... Read More

Hennion & Walsh CIO, Kevin Mahn Quoted in Dow Jones Newswires

Hennion & Walsh CIO, Kevin Mahn quoted in Dow Jones Newswires ... Read More

Hennion & Walsh CIO, Kevin Mahn, quoted in SmartMoney

Hennion & Walsh CIO, Kevin Mahn, quoted in SmartMoney ... Read More

Good News on the Housing Front

According to an August 26th Bloomberg report by Shobhana Chandra, new home sales increased by 9.6% in July - the most since February of 2005. The gain, due in large part to historically low interest rates, incentives for first-time buyers and lending support from the Fed, translates to an annualized pace of 433,000 units. It also represents the 4th straight increase in new home sales, following an equally impressive 9.1% gain for June. Perhaps even more importantly, the number of houses for sale dropped to the lowest level in 16 years ... Read More

The Importance of the U.S. Consumer

To borrow from an often used slogan, with slight improvisation, "It's the spending stupid." The surest way to get our economy back on track again is to have businesses and, even more importantly, consumers start spending again. In an economy where 70% of growth comes from spending, reports that show Americans saving more and spending less are generally not received positively by economists. The question then becomes how best to achieve this seemingly simple objective of encouraging individuals and companies to start spending again ... Read More

Is there a Bond Bubble that is about to Burst?

We have been repeatedly asked over the course of the last several weeks if there is in fact a bond (or more specifically a U.S. Treasury bond) bubble that is about to burst. A valid argument can be made for the likelihood of a drop in U.S. Treasury bond prices in the near future due to the following factors: ... Read More