No, we expect that while the US dollar should decline from its current elevated level over the medium term, there are factors that will continue to provide it with support in the short term. If our expectations are met, later this year or early next year should be an opportune time to consider positioning portfolios to benefit from a weaker dollar.
Inflation is having a moment—driving up the costs of delivering the nonprofit mission and making it more challenging to maintain endowment purchasing power. This environment highlights the importance of endowment spending policies and their role in balancing near-term spending needs and intergenerational equity.
The 2022 Europe ex UK edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.
The year started with a strong risk-on rally as declines in inflation prints in the United States and Europe fueled the narrative for “soft landing”—suggesting the economy could avoid a crash, while inflation continued to soften. However, the buoyant sentiments abruptly gave way to great uncertainty when Silicon Valley Bank’s stock plummeted in early March.
No. We think most investors should not alter portfolios based solely on debt ceiling risks. Instead, they should remain focused on the long term and rely on the diversification in their existing portfolios. But given the potential for additional stress in funding markets, investors should ensure they have ample liquidity to meet upcoming capital calls and spending needs.
Yes. A rigorous operational due diligence (ODD) review is a core piece of the investment manager underwriting process that allows limited partners to make informed investment decisions. Recent banking sector events, including yesterday’s collapse of First Republic Bank, highlight the need for a constantly evolving ODD framework capable of identifying and addressing both ongoing and new risks that managers may encounter.
Our biannual report summarizes asset allocation and total investment performance for 20 of Cambridge Associates’ UK foundation and endowment clients.
Costs are an important consideration when devising an overall wealth management strategy. Each family’s wealth management cost formula is different. Various tools and insights are available to help them make informed decisions about how to meet their unique service requirements and investment goals at a reasonable cost.
India has arguably the most compelling long-term growth opportunity in the global economy today. But should investors buy the hype surrounding Indian equities? We think India’s bright economic prospects have the potential to drive strong equity market returns in the long run; however, we do not think Indian equities offer a compelling overweight over a shorter-term, tactical horizon. Investors interested in India’s growth story from a strategic perspective should build allocations through high-quality public and private managers, preferably toward active managers on the public equity side.
In this edition of Asia Insights, we highlight areas in public equities, private investments, real assets, and hedge funds where we continue to find opportunities, despite the current environment of higher rates and market uncertainty.