Thursday, October 17, 2013

Relative Comparisons

Now that the debt ceiling issues have been resolved, will the market get back to a somewhat normal state?  We sure hope so, at least until January when we catch back up with the can.

It's commonly said that the allocation within a portfolio is the major driver of returns.  They may very well be true but it's also important to pick the proper way to the various exposures to the allocation that you want.  With so many ETPs in the market place trying to do things a little different, you can get significant variation in performance depending on which on you pick.

We at ETFGsm try to provide you will as many tools as possible to help you make these important decisions.  For example if you were interested in buying a product that is focused on the Financial sector,  you could go to the ETFG Scanner and search for products that focus on Financials compare them based on Risk, Reward, expenses and many other data points.

Those are all very important but you might be interested to see how an ETP has performed compared to a range of other products over different time frames.  We make viewing relative performance easy.  In this case we will use XLF as an example to continue our Financials theme.  If you go the Tearsheet for XLF, you will notice a number of tabs at the top.  Click on the "Performance" tab.  You will first be presented with historical returns and cumulative returns over a number of time frames.  Below those tables, we have created box plots that compares the historical returns to 3 different peer groups.  The groups are by Asset Class, Category, and Focus.  Here is an example of the focus (Financials) for XLF:

The Box Chart always you to easily see the High, Low, 25th percentile, 75th percentile, and median of the group.  In the table below it, you can see all the data along with how the product itself compares.  By the way, we exclude Levered and Inverse products from the group statistics so they do not get skewed.

As always, thank you for reading ETFG Daily Perspectives.

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