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Home |Subscribers |Company | Products Français |
| The Security Market Line is a valuation service
for French, German and Swiss equities, based on a practical application of the Capital
Asset Pricing Model (CAPM). The objective is to optimize asset allocation
between countries, asset classes, and stocks.
The French Security Market Line Service was launched in 1977. Since then, Associés en Finance has run the model on a monthly basis and has developed similar valuation models for other European countries. The Market Line reflects the average relation between return and expected risk. It is used by institutional portfolio managers in both traditional and quantitative portfolio management: Asset allocation: the Security Market Line shows the equity market's required rate of return for a given level of risk, and the relative attractiveness of equities compared with bonds. Investors use the Market Line to manage risk and determine the optimal allocation between asset classes. Stock selection: the position of each point relative to the market line indicates its degree of under- or over-valuation. The Security Market Line model has performed well in both of these respects. Working alongside Associés en Finance enables research teams to operate with consistent hypotheses and facilitates the monitoring of both quality and results. This, in turn, leads to a more acute perception of market pricing errors. Associés en Finance is currently contributing its expertise to a number of research teams throughout Europe with the aim of putting together a European Security Market Line. Eventually, the result will be an integrated valuation model for the top 1200 companies in Europe. So far, Associés en Finance produces a Security Market Line for the German market, and with Zürcher Kantonalbank for the Swiss market. Associés en Finance produces the French SML independently.
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