With underlying assets that provide essential services, infrastructure debt can play a key role in institutional investor portfolios. In this research note, we review how infrastructure debt has evolved, discuss its investment qualities, and highlight a few thoughts for those considering an allocation.
Worries over the health of US credit markets have risen in recent months, with numerous reports highlighting the growing vulnerability of indebted companies (and thus investors) to rising rates and a potential turn in the economic cycle. This paper provides our updated thoughts across US credit markets, as well as some tactical tilts investors could employ to help navigate a few of these headwinds.
Yes, but investors should be selective in allocating to credit markets at this point in the cycle, and understand that the overvaluation of many credit assets could make attractive returns hard to come by.
Though it is getting late in the cycle, there is nothing to indicate a recession is imminent; however, maintaining appropriate levels of diversification and liquidity to meet cash requirements during periods of stress is becoming increasingly important.
The recovery rate on senior loans looks poised to fall in the next cyclical downturn, as weaker structures and terms impact the market. In this research note, we highlight our concerns and consider how the cocktail of unitranche loans, inflated cash flow assumptions, and weak terms could threaten recoveries in the next cyclical downturn.
While the focus on making contributions prior to the mid-September tax deadline is important for corporate defined benefit plan sponsors, it should be the first step in establishing a dynamic contribution roadmap. Especially given potentially mounting contribution requirements ahead, plan sponsors should take this opportunity to view their contribution policy as one available lever—along with asset returns, liability hedges, and benefit management—in navigating the pension plan to a strong financial position.
Solid fundamentals in most countries should limit the damage.
Climbing the wall of worries is getting tougher. There is room for markets to progress, but caution is required at this stage in the cycle. Markets must overcome four main forces: monetary policy tightening, US dollar strength, a China growth slowdown, and trade friction.
This report, based on a survey that Cambridge Associates administers annually to our foundation clients, summarizes returns, asset allocation, and other investment-related data for 111 foundations for the year ended December 31, 2017. Included in this year’s report are commentary and exhibits across five sections: Investment Portfolio Returns, Asset Allocation, Investment Manager Structures, Payout from the Long-Term Investment Portfolio, and Investment Office Staffing and Governance.
Equity markets and commodity-related assets outperformed other asset classes, while monetary policy expectations continued to negatively impact bond markets during the fiscal year ending June 30, 2018. This brief chart book looks at returns and other market metrics for fiscal year 2018.