Robeco's Lukas Daalder has a bit of an issue with rolling-performance graphics. Bashing a recent chart of 1-year price returns on these pages that profiled ETF proxies for the major asset classes, he charges that “this information is useless to anyone with any sense.” Oh, dear. That sounds like trouble. Has your editor led you down a dead end? Apparently. “So if the people who compiled the graph were hoping to draw our attention to any one particular issue, they have failed,” Daalder asserts. But failure sometimes has a way of turning into success, or at least it did in this case. After advising that there was no value in a chart of rolling 1-year returns of funds representing the major asset classes, he adds that this information “still tells us something.”

Is it a useful something? That's a reasonable conclusion, suggests Daalder, who goes on to investigate the topic that he just dismissed, namely, the unusual sight of across-the-board losses (in price-only terms) in the global capital and commodity markets at one point in September. He claims that “the information is poorly presented,” yet “the underlying message is worth explaining.” Success! In fact, the chart “gives a pretty good picture of what has been happening in the financial markets in the recent past.” Hmmm, maybe rolling one-year performance data isn't analytical garbage after all.

Well, of course. That's the point. A rolling 1-year performance graph is no silver bullet for analyzing the markets, but as a quick tool for profiling the directional bias for a set of assets it's useful first step. There's no reason to focus exclusively on 1-year results, of course, although it's a decent starting point because the historical window straddles the midway point between short- and medium-term horizons.

To be fair, rebased performance indexes, which Daalder apparently prefers, have a productive role too. Agreed, which is why they also routinely appear on The Capital Spectator—last week's review of US equity sector ETFs, for instance.