Rising from the Ashes: Key Developments Since the Global Financial Crisis
In this report, we briefly highlight five key post-GFC developments and discuss how investors might adapt their portfolios to these changes.
Research Publications Archive
Spending Policy Practices: 2018
Annual distributions from the endowment are a source of supplemental operating revenue for most endowed institutions, as an institution’s spending policy serves as a bridge that links the long-term investment portfolio and the enterprise. The data and analysis in this report cover a variety of spending topics including spending rule types, the endowment’s support of operations, and effective spending rates. This year’s report draws on a supplemental study Cambridge Associates conducted in April 2018 to dive deeper into some technical factors of spending policy, specifically focusing on spending from new endowment gifts.
In Light of Ongoing “Brexit” Uncertainty, Should Investors Reduce Exposure to UK Equities?
No, investors should consider staying the course. Though developments and headlines associated with the United Kingdom’s Article 50 negotiations with the European Union have been and likely will remain fitful, they reflect more the political nature of the process and less the underlying fundamentals of the economy and its listed equities.
Infrastructure Debt: Understanding the Opportunity
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.
Are the Credit Bears Getting Lost in the Woods?
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.
Amid Rising Risks, Should Investors Maintain Credit Allocations?
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.
Bear Market Indicators: Where Are We in the US Cycle?
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.
Senior Loans: Recovery Rates May Fall in Next Downturn
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.
Time for a Reset? Rethinking Contributions Policy
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.
Are Emerging Markets Equities Vulnerable to a Rising US Dollar?
Solid fundamentals in most countries should limit the damage.