The Good, Bad and Ugly of High Active Share

Patrick O’Shaughnessy, portfolio manager at O’Shaughnessy Asset Management and curator of the investment blog, The Investor Field Guide, explains that active share – a measure that shows how different a portfolio is from its preferred benchmark – helps measure the “potential” of a fund or strategy’s excess return. O’Shaughnessy runs a number of simulations that show the outperformance and underperformance potential of a portfolio with varying degrees of active share compared to the S&P 500. While high active share shows massive outperformance potential it also shows that a strategy that looks very different from the benchmark can underperform the benchmark […]

Positioning for 2016

  Patrick O’Shaughnessy of O’Shaughnessy Asset Management says “if you look historically at what broad categories do well during period of rising rates . . . value stocks tend to do well.”  He notes that “this year has been the opposite story,” but with Fed rate increases widely anticipated, O’Shaughnessy says, “we would recommend that people re-position towards value stocks.” Andrew Slimmon of Morgan Stanely Investment Management says he anticipates stocks will do “modestly better” in 2016. He noted that much of the decline in the market this year is “because of energy. So, you get rid of that energy […]

Dividend Stocks Offering More Than Just Dividends

In his latest piece for, Validea CEO John Reese takes a look at some dividend stocks that also offer solid fundamentals. In the article, Reese looks at Patrick O’Shaughnessy’s latest research on dividend payers, which shows that high yielding stocks no longer trade at the discount to the market that they traditionally have. According to Reese, the fact that this valuation advantage no longer exists means that investors need to look much more closely at the fundamentals of a company and cannot rely on dividend alone. As Reese puts it, “Rushing blindly into high-dividend stocks simply because they have a […]