With the initial chaos of the COVID-19 pandemic somewhat behind us but much uncertainty and potential volatility ahead, plan sponsors will be well served by focusing on—and possibly recalibrating—some core plan management elements. These approaches include liquidity management, rebalancing processes and opportunities, governance, and communication.
In April 2020, Cambridge Associates conducted a survey of our foundation clients to gauge sentiment about spending for the current year and to understand potential sources of flexibility and liquidity in light of the COVID-19 pandemic. This year has brought tremendous disruption and uncertainty, but foundations are approaching these challenges with responsive philanthropy and a long-term view, so they can support important causes in 2020 and beyond.
The US economy lost a staggering 20.5 million jobs in April, in the worst plunge in payrolls since the Great Depression, according to data released by the US Bureau of Labor Statistics this morning.
The “secret sauce” to long-term investment success is, in most cases, the governance that guides and oversees the investment program. Governance plays the special role of steering endowments toward long-term goals, through good times and bad. Good governance is a steady presence that does not get overly confident or discouraged by a single decision or caught up in the latest trend. Good governance is rewarding for the institution it serves and the investment committee members who participate.
It starts with an understanding of the roles and responsibilities of governance and an appreciation of the long-term goals of the investment program. Clear definitions help investment committee members, staff, and advisors understand and do their jobs effectively and establish an environment of accountability.
There is an art and a science to building an effective investment committee. Governance excels when a diverse group comes together with complementary contributions, a shared understanding of their role in the endowment’s long-term goals, and a spirit of debate and respect that makes the work enjoyable.
The work of successful investment committees are supported by disciplined processes and work habits. Their work is conducted in a respectful and welcoming culture, with strong leadership, clear expectations, and intellectual stimulation.
As the current market environment continues to rapidly evolve, we remind investors that reviewing the history of business cycles, returns, and valuations can help provide a framework for understanding the market today. Our 2019 edition of Decades of Data presents historical analysis on economic indicators, equity, fixed income, and cash markets across eight geographies over the very long term.
Negative prices on near-dated WTI futures grabbed headlines yesterday. However, we should not assume from this that oil has negative value.
In recent weeks, as the COVID-19 pandemic spreads across the globe, nominal high-quality sovereign bond yields throughout developed markets have plummeted toward zero, increasing the likelihood that most developed markets may soon need to contend with negative yields, and leading investors to question whether high-quality sovereign bonds are still the best form of insurance. In light of these developments, we examine the historical safe-haven characteristics of high-quality sovereign bonds and assesses whether they remain a viable safe-haven asset when nominal yields are negative.