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The recent development of the European debt sovereign crisis showed that sovereign debt is not “risk free.” The traditional index bond management used during the last two decades such as the market-capitalization weighting scheme has been severely called into question. In order to overcome these drawbacks, alternative weighting schemes have recently prompted attention, both from academic researchers and from market practitioners. One of the key developments was the introduction of passive funds using economic fundamental indicators.

In this chapter, the authors introduced models with economic drivers with an aim of investigating whether the fundamental approaches outperformed the other models on risk-adjusted returns and on other terms.

The authors did this by constructing five portfolios composed of the Eurozone sovereigns bonds. The models are the Market-Capitalization RP, GDP model RP, Ratings RP model, Fundamental-Ranking RP, and Fundamental-Weighted RP models. These models were created exclusively for this chapter. Both Fundamental models are using a range of 10 country fundamentals. A variation from other studies is that this dissertation applied the risk parity concept which is an allocation technique that aims to equalize risk across different assets. This concept has been applied by assuming the credit default swap as proxy for sovereign credit risk. The models were run using the Generalized Reduced Gradient (GRG) method as the optimization model, together with the Lagrange Multipliers as techniques and the Karush–Kuhn–Tucker conditions. This led to the comparison of all the models mentioned above in terms of performance, risk-adjusted returns, concentration, and weighted average ratings.

By analyzing the whole period between 2006 and 2014, it was found that both the fundamental models gave very appealing results in terms of risk-adjusted returns. The best results were returned by the Fundamental-Ranking RP model followed by the Fundamental-Weighting RP model. However, better results for the mixed performance and risk-adjusted returns were achieved on a yearly basis and when sub-dividing the whole period in three equal periods. Moreover, the authors concluded that over the long term, the fundamental bond indexing triumphed over the other approaches by offering superior return and risk characteristics. Thus, one can use the fundamental indexation as an alternative to other traditional models.

The purpose of this paper is to build alternative indices weighing using a measure of fundamental value rather than debt size. The official bond indices built to reflect general price trends are market weighted, meaning that the bonds are weighted by their debt size. The more indebted, the more weight in the index, which mechanically increments the investment risks that are inherent. Those market indices are shown to be return-to-risk inefficient in recent studies compared to indices with alternative weighting schemes. The authors contribute to this growing literature, which mostly focuses on equities, by testing on bonds.

The authors build alternative indices weighing using a measure of fundamental value rather than debt size. The authors have done this for sovereign bonds using gross domestic product (GDP) figures and for corporates taking sales revenues.

The authors find in empirical tests that the fundamental indices build tend to outperform the market-weighted indices.

This article builds on two articles by Arnott et al. (2005, 2010), in the Financial Analysts Journal and Journal of Portfolio Management, respectively, and adds value in the sense that – it takes an appreciation-free fundamental measure, – tests on the European as opposed to the US bond markets.

This study aims to investigate the performance of fundamental weighted portfolios (using sales, cash flows, dividends, book values and a composite of all these variables), an equal weighted portfolio and a smoothed cap-weighted (CW) portfolio in Middle East and North Africa (MENA) markets. The performance of these portfolios is compared with that of a CW portfolio for the period 2005 to 2015.

The portfolios are formed using different concentration levels, different construction schemes and different sub-regions. The performance is assessed using a large set of risk-adjusted performance measures, including more robust measures in the context of multi-factor models, such as the Fama and French (1993) three-factor model, the Fama and French (2015) five-factor model and a seven-factor model.

The results show that the fundamental portfolios, with the exception of the sales portfolio, underperform the CW portfolio using either the traditional or more robust risk-adjusted performance measures. The underperformance of the fundamental portfolios is found to be robust using different concentration levels, different construction schemes and different sub-regions. The results also show that the equal weighted portfolio outperforms the CW portfolio using traditional risk-adjusted measures. However, after controlling for additional risk factors, this outperformance disappears.

The failure of fundamental indexation in the emerging markets could help the researchers and the academics to search for the best weighting method that could be used as an alternative to the CW indexation method.

The results of the study add evidence to the debatable propositions on the performance of fundamental portfolios in emerging markets. Furthermore, the findings may help domestic and international investors, practitioners and decision-makers to deepen their knowledge in terms of the best portfolio construction scheme in the MENA region.

Towers Watson (TW) has always conducted its own research into alternative approaches to market cap investing. A senior investment consultant with TW, impressed by a recent presentation by the CIO of Research Affiliates (RA) about an innovative investing concept called the “Fundamental Index methodology,” thinks it might be an important innovation in applying nonmarket cap approaches. But he has some concerns about the approach and whether or not it would be appropriate for TW's clients who depend on the firm to keep them on the cutting edge of institutional investing.

The purpose of this study is to determine the Turkish housing price and rent dynamics among seven big cities with a unique monthly data set over 2003–2019. The secondary purpose is to examine bubble dynamics within the price convergence framework through alternative tests.

The paper conducts two autoregressive distributed lag (ARDL) cointegration estimates for housing prices and rents and applies conditional error correction model to investigate the long-run drivers of the Turkish housing market. The authors compare ARDL cointegration in-sample forecasts and discounted cash flow (DCF) estimates with actual prices to determine the timing, magnitude and collapse period(s) of bubbles within the price convergence framework. In particular, the generalized sup augmented Dickey–Fuller (GSADF) approach time stamps multiple explosive price behaviors.

The ARDL results confirm the theory of investment value by addressing mortgage rates, the price-to-rent ratio and rents as the fundamental factors of house prices. The price-to-rent ratio offers a comparison mechanism among houses deciding to buy a new house in which rents increase monthly real estate investment returns, and mortgage rates act as the discount rate. One key finding is that these dynamics have a greater impact on house prices than mortgage rates. Furthermore, the ARDL, DCF and GSADF findings exhibit temporal overvaluations rather than bubble signals, implying that housing price appreciations, including explosive behaviors, are consistent with fundamental advances.

This paper is considered to be innovative in determining housing market dynamics through two different ARDL estimates for the Turkish housing price index and rents in real terms as dependent variables. The authors compare the boom and collapse periods of the real housing price index and its fundamentals via the GSADF test. A final key feature of this research is its extensive data set, with 11 different regressors between 2003 and 2019.

Companies spend millions on training their sales representatives. Thousands of textbooks have been published; thousands of training videos have been recorded. Hundreds of good pieces of advice and tips for sales representatives have been presented along with hundreds of sales methods and techniques. Probably the largest number of indicators and measures are applied in sales and distribution. On the one hand, this is a result of the fact that sales provide revenue and profit to a company; on the other hand, the concept of management by objectives turns out to be most effective in regional sales teams with reference to sales representatives and methods of performance evaluation. As a result, a whole array of indices has been created which enable the evaluation of sales representatives’ work and make it possible to manage goods distribution in a better way.

The indices presented in this chapter are rooted in the consumer market and are applied most often to this type of market (particularly in relation to fast-moving consumer goods at the level of retail trade). Nevertheless, many of them can be used on other markets (services, means of production) and at other trade levels (wholesale).

Although the values of many indices presented herein are usually calculated by market research agencies and delivered to companies in the form of synthetic results, we have placed the emphasis on the ability to determine them independently, both in descriptive and exemplifying terms. We consider it important to understand the genesis of indices and build the ability to interpret them on that basis. What is significant is that the indices can be interpreted differently; the same index may provide a different assessment of a product’s, brand or company’s position in the market depending on the parameters taken into account. Therefore, we strive to show a certain way of thinking rather than give ready-made recipes and cite ‘proven’ principles. Sales and distribution are dynamic phenomena, and limiting them within the framework of ‘one proper’ interpretation would be an intellectual abuse.

There have been several studies of alternative equity index strategies which suggest better investment opportunities with higher risk adjusted return pointing out empirical evidence of inefficient risk-return trade-off implied in the market-cap weighted index. Commercial products based on these strategies, regarded as passive equity strategies, become more popular in the U.S. and European stock markets. We investigates whether these strategies are also valid in Korean stock market and our empirical results add support to their efficacy.

From Fama-French 3-factor analysis, we find that the excess return of alternative equity index is attributed to market, size and value factors and it does not show a significantly positive alpha. Even without positive alpha, however, these strategies are valuable to investors in the sense that they offer opportunities to fully exploit size and value premium with long-only portfolios. The advantage of these strategies is more straightforward recalling the fact that rebalancing of Fama-French factor portfolios involves short-sale and high turnover.

Portfolio selection has been extensively studied in field of business and economics. Many methods have been developed to construct a well-diversified portfolio that is expected to result in higher investment return with minimum risk. One of the most foundational works contributing to modern portfolio selection is the Markowitz mean variance optimization approach. The Markowitz approach heavily relies on past stock price performance, both in term of correlation structure and the return, to predict the future outcome. We constructed both Markowitz portfolio and the Fundamental Indexing portfolio independently, then using Buffet ratio to weight, combined both portfolio into a newly blended portfolio, test out-of-sample the new portfolio in term of return and then compare it to the Indonesian LQ45 benchmark index. The result shows that the new combined portfolio returns annually on average 43.89% higher than the benchmark index.

A rule‐governed derivation of an indexing phrase from the text of a document is, in Wittgenstein's sense, a practice, rather than a mental operation explained by reference to internally represented and tacitly known rules. Some mentalistic proposals for theory in information retrieval are criticised in light of Wittgenstein's remarks on following a rule. The conception of rules as practices shifts the theoretical significance of the social role of retrieval practices from the margins to the centre of enquiry into foundations of information retrieval. The abstracted notion of a cognitive act of ‘information processing’ deflects attention from fruitful directions of research.