The Brandes Institute develops ideas and research that expand the investment community's understanding of market behavior and portfolio management. The Institute is a division of Brandes Investment Partners, a leading investment management firm based in San Diego.
Most Recent Research Projects:
Fixed Income Falling Knives Phase Two: Examining the Relationship Between Issuer-Specific Bond and Equity Returns (October 2007)
Previous research by the Brandes Institute documented the opportunities available by investing in falling knives (securities whose prices have fallen sharply). Now, in new research on this topic, we investigated the relationship between bond and equity prices in this context. Specifically, we looked for evidence of whether a company’s stock price before a fixed income falling knife event gave any indication of its subsequent bond prices, or vice versa.
Global Small Cap Stocks: Reexamined and Redefined (July 2007)
The small-cap premium has not been apparent consistently in developed markets outside North America since 1989. Why? In this comprehensive study, the Brandes Institute investigates existing methodologies for defining the global small-cap universe and their relationship to performance. We also introduce regional and country universes designed to analyze constituent-level fundamentals and their influence on historical performance differences.
Our research reveals that North American small caps have shown differentiating fundamental traits vs. their non-North American small-cap peers. But these differences in fundamentals may not fully explain the performance disparity. Perhaps the origins of a company and its point on its “lifecycle” are different across regions. The Brandes Institute intends to examine the performance characteristics of lifecycle groupings among small caps across regions and sectors.
Most Recent Articles:
Value vs. Glamour: The Challenge of Expectations (February 2008)
In “Value vs. Glamour: The Challenge of Expectations,” the Brandes Institute examines the historical performance of individual glamour and value stocks. We believe this performance data demonstrates why investors should be cognizant of the relationship between stock price and value. The specific stock references remind investors that companies with soaring growth rates and wide popularity may not always make great investments.
Liability-Driven Investing and Equity Duration (January 2008)
Increasing interest in liability-driven investing (LDI) in the pension community has prompted many plan sponsors to seek longer-duration investments. Historically, empirical evidence has guided plan structures toward long-duration bonds as an appropriate liability-matching instrument, citing relatively short durations for U.S. equities. However, LDI depends upon accurately measuring duration for assets – including equities. In this article, the Brandes Institute reexamines assumptions used to calculate equity duration and poses key questions for investors to consider when pursuing LDI.
Death, Taxes, and Short-Term Underperformance: Fixed Income Funds (September 2007)
In our initial Death, Taxes, and Short-Term Underperformance equity studies, we established that short-term underperformance may be unavoidable, even when investing in top-performing equity funds. In this article, we find strikingly similar results among fixed income funds. Given bond investors’ loss-averse predisposition, weathering stretches of short-term underperformance may have proved challenging, even when investing in fixed income funds that delivered favorable long-term performance. (Note: This article has been filed with FINRA)
Other Featured Pieces:
Value vs. Glamour: Updated and Expanded
Value vs. Glamour Non-U.S.: The Value Premium in Non-U.S. Markets
Benjamin Graham on Fixed Income
Falling Knives Around the World
Our Complete Collection:
Click here to view a list of all Brandes Institute publications
Manager Challenge® is a registered trademark of Brandes Investment Partners, L.P. in the United States.