In <ext-link><bold><italic>Using Excel’s “LAMBDA” Function to Compute Modified Duration, Dollar Duration, and Bond Convexity</italic></bold></ext-link>, from the Spring 2025 issue of <bold><italic>The Journal of Wealth Management</italic></bold>, <bold>Tom Arnold, Joseph Farizo, Andrew Szakmary,</bold> and <bold>Nancy Tran</bold>, all of the <bold>University of Richmond</bold>, illustrate the use of Excel’s “LAMBDA” feature. They show how to easily create several new custom Excel functions that are not in the standard Excel function library to measure interest rate risk. Their application of the LAMBDA function provides examples of how investors can expand their Excel function libraries without having to use the visual basic application (VBA) or macros. Managing interest rate risk within fixed-income portfolios is important, and measures of duration and convexity are instrumental in the process. However, calculating these measures from scratch can be challenging. Excel provides some functions that are helpful for measuring duration, but none for convexity. A custom function for measuring convexity is a perfect illustration of the power and simplicity of Excel’s LAMBDA function.

In <ext-link><bold><italic>Asset Allocation—Commodities or Commodity Stocks</italic></bold></ext-link>, from the Fall 2023 issue of <bold><italic>The Journal of Wealth Management</italic></bold>, authors <bold>Sony Thomas</bold> and <bold>S. S. S. Kumar</bold>, both of the <bold>Indian Institute of Management, Kozhikode</bold>, find that an allocation to a mix of non-agricultural commodities—base metals, precious metals, and hydrocarbons—boosts diversification and maximizes the risk-adjusted returns on a portfolio of Indian stocks and bonds. Using only gold to boost diversification yielded higher absolute returns, but at the cost of greater volatility over the full sample period. Additionally, using commodity futures for diversification outperformed using commodity-related stocks. The authors focused on the Indian financial markets and examined data from November 2006 through March 2022.

In <ext-link><bold><italic>The Hierarchy of Empirical Evidence in Finance</italic></bold></ext-link>, from the September 2023 issue of <bold><italic>The Journal of Portfolio Management</italic></bold>, <bold>Marcos López de Prado</bold> of the <bold>Abu Dhabi Investment Authority</bold> explains that investment professionals should place varying degrees of confidence in investment strategies based on the type of evidence on which they are based. Greater confidence should be placed in strategies based on falsifiable theories that embody a causal mechanism explaining how a given factor produces a result. Less confidence should be placed in strategies based merely on observed associations (correlations) among events that might or might not have any causal relationship to one another. The author explains that strategies grounded on 1) expert opinions, 2) case studies, or 3) econometric studies generally lack scientific rigor in specifying a falsifiable causal mechanism to explain how they work. Scientific rigor is generally present in strategies based on either simulated interventions or natural experiments, both of which embody the formal use of falsifiable theories.

In <ext-link><bold><italic>Asset Allocation for Retirement Income: A Framework for Income-Oriented Investors</italic></bold></ext-link>, from the March 2023 issue of <bold><italic>The Journal of Portfolio Management</italic></bold>, <bold>Steve Sapra</bold>, <bold>Sean Klein</bold>, and <bold>Rene Martel</bold>, of <bold>PIMCO</bold>, assert that investors who value income but also seek to preserve their wealth may find that a 40% equity/60% fixed-income is an appealing asset allocation in retirement. They base their finding on assumptions that the future will bring lower equity returns and higher bond yields than have prevailed for the past 40 years. More broadly, the authors analyze the trade-off between current income and wealth accumulation and its implications for asset allocation under their assumptions regarding future equity returns and bond yields.