The Dogs of the Dow strategy has long been popular among investors. McQueen, Shields, and Thorley (1997) find that while the strategy beat the Dow with statistical significance the results were not economically significant. However, Filbeck, Holzhauer, and Zhao (2017) examine a variation of the Dogs of the Dow using Fortune’s Most Admired Companies and find it beats the S&P 500 on a risk-adjusted basis with both statistical and economic significance. We test another variation that applies the Dogs of the Dow strategy to the S&P 500, selecting the five highest dividend yield stocks from each S&P 500 sector. We compare returns of this Sector Dogs strategy to those of the Dogs of the Dow and the S&P. We find that this strategy produces significantly higher raw returns. The Sector Dogs also significantly outperforms the S&P in terms of the Treynor Ratio and Jensen’s Alpha.
Author(s): Brett Cotten, Autumn Wilson, Alan Tidwell
This study examines the risk-adjusted performance of actively managed mutual funds vs. passively managed mutual funds between 1991 and 2018 and finds that the statistical significance of the difference in performance between the two types of funds disappears when the passively managed funds are compared to competitively priced actively managed funds. The practical implication of this study is that, setting tax considerations aside, as long as investors are cost conscious in their fund selection process, investing in passively managed funds does not meaningfully improve investor outcomes.
Associate Professor of Finance, California State University, Fullerton
- ETFs- Active vs. Passive Investing- Opportunities for firms to invest in the future of the Mihaylo College's CFP Board-Registered Personal Financial Planning Program
Tuesday October 15, 2019 9:00am - 9:50am CDT
201 A
This paper analyzes the effect of student loan debt on personal bankruptcy. While nearly impossible to discharge education debt in bankruptcy, student loans have mandatory repayments that may constrain some borrowers. The distress faced by some may reach the point where student loan borrowers seek protection for those debts that can be addressed through bankruptcy. Results suggest that student loan debt may supplement the existing credit card debt and adverse event explanations of bankruptcy. We present evidence from a nationally representative panel survey (NLSY79) that education debt is positively related to filing for bankruptcy among those with active unpaid loans. Student loan borrowers with ‘some college’ are 64 percent more likely to file bankruptcy. Associate degree holders and those with a bachelor degree or higher education are 68 percent and 43 percent more likely to seek bankruptcy protection, respectively. Separately, we estimate that the likelihood of bankruptcy increases 6.8 percent for each $10,000 of unpaid loans.
With student loan debt topping $1.53 trillion by the second quarter of 2018, understanding the impact of that debt on borrowers is of critical importance (Board of Governors of the Federal Reserve System, 2018). Many student loan borrowers report that student loan debt is preventing them from purchasing a home (The National Association of Realtors Research Department and American Student Assistance, 2017). Studies have shown that there is a negative relationship between student loans and homeownership (Mezza, Ringo, Sherlund, & Sommer, 2016). Despite the importance of housing in the U.S. economy and the concerning relationship between student loan debt and homeownership, very little research has been done in this area. This study seeks to expand the research by examining the impact of both federal and private student loans on homeownership. Additionally, mortgage debt burden as it relates to federal and private student loans is investigated.
This study was designed to obtain a better understanding of an investor’s portfolio choices by examining the mediation effect of the use of a financial planner on the willingness to take risks. The dataset used in this study was the 2016 wave of the Survey of Consumer Finances (SCF). To determine the association among the variables, a logistic regression and Ordinary Least Squares (OLS) regression models were developed. Study results indicated that those who are more willing to take risks tend to use the services of a financial planner and tend to hold a larger proportion of stock assets in their portfolios (as a percentage of overall financial assets). However, with regard to holding risky assets, findings suggest that the effect of willingness to take risks is reduced somewhat when an investor’s use of the services of a financial planner is accounted for.
Several recent papers report that investors would benefit from investing in equal-weighted portfolios instead of the traditional value-weighted portfolios. These papers employ theoretical models and simulated portfolios to support their recommendation. Since this switch would be a radical change from current practice for index investors, we re-examine this proposition by studying the historical performance of equal-weighted and value-weighted versions of five different S&P and Russell stock indexes over the last two decades. Adopting the individual investors’ perspective, we also examine the performance of exchange traded funds that track these indexes.
