A Brief History of Smart Beta + MORE Sep 1st

This post is Part 2 in a series about smart beta ETFs. See below for links to other posts in the series.
 
Smart beta is a relatively new term, but its roots stretch back several decades. Let’s look at the history of how the idea developed.
We’ll start with a simple question that has long been asked by students of the financial markets: what explains the difference in returns among stocks?
Back in the 1960s, economists and finance professors developed the capital asset pricing model (CAPM), which suggested that returns were directly related to risk. The formula began with a risk-free rate of return—for example, Treasury bills—plus an additional return for the stock market as a whole, called the equity risk premium. Then the model considered whether a given stock was more or less volatile than the overall market using a measure called beta. If a stock had a low beta—making it relatively less risky than the market—it should have a lower expected return. Stocks with higher beta should theoretically reward investors with a greater return…

The Globe and MailReal estate gets starring role in S&P 500, spurring ETF overhaulThe Globe and MailThe first reboot of S&P 500 Index group weights in almost two decades has arrived, shaking up stock portfolios and conjuring an industry out of real estate investment trusts that will infuse at least one lightweight ETF with sudden riches. With the …Canadian Stocks Rise, Erase Loss as Materials Rebound With GoldBloombergTSX dips as lower oil and gold prices weighReuters Canadaall 96 news articles »

NEW YORK, N.Y. – The latest on developments in global financial markets (all times local):
11:45 a.m.
The stock market is getting September off to a weak start as indexes turn lower in midday trading.
Campbell Soup sank 6 per cent Thursday after reporting results that fell short of analysts’ forecasts. Costco also fell 3 per cent after its sales disappointed.
Energy companies fell in tandem with the price of oil. Exxon Mobil and Chevron each fell 1 per cent.
The Dow Jones industrial average gave up 86 points, or 0.5 per cent, to 18,315.
The Standard & Poor’s 500 index fell 10 points, or 0.5 per cent, to 2,160. The Nasdaq composite declined 10 points, or 0.2 per cent, to 5,202.
Bond prices rose. The yield on the 10-year Treasury note fell to 1.56 per cent.
___
9:35 a.m.
The stock market is starting off September with slight gains, led by retailers and other consumer stocks.
Wynn Resorts jumped 6 per cent, the most in the Standard & Poor’s 500 index. Cruise operator Royal Caribbean rose 3 per cent…

Peter MacKay. Darryl Dyck/CP
OTTAWA — Peter MacKay says he knows he must decide quickly whether he will join the Conservative leadership race.
“Obviously a decision has to be taken soon, because I don’t want to freeze people out, or influence their decisions,” said MacKay, a former Conservative cabinet minister from Nova Scotia.
“I suspect that that’s already happening, to some degree, so I’m very aware that a decision has to be taken soon and I’m seriously getting close to making that decision,” he said.
Conservatives say that since MacKay would be a strong contender to replace former prime minister Stephen Harper, some other potential hopefuls — and their would-be campaign organizers and financial donors — are likely waiting to see what he will do.
The Conservatives are to vote for a new leader next May and many believe the race will not really begin to take shape until the caucus gathers for a retreat in Halifax later this month.
MacKay did not reveal his personal timeline for making his choice, but said “it’s getting close…

Retail reports earnings per share of 88 cents in the second quarter, up from 74 cents a year earlier