Several important central banks—most notably the European Central Bank and the Swiss National Bank—have recently broken the “zero bound” for interest rates by moving their official policy rates decisively into negative territory, causing rates on some money market funds and wholesale deposits denominated in those currencies to also go negative. At this pace, it may…
This chart book provides context on previous US dollar rallies and where the dollar is in the current cycle.
We continue to find high-yield bonds uncompelling; select opportunities in high-yield energy credit may offer attractive alpha Solid credit fundamentals and 6%+ yields in a low-return environment have lured some investors back to high-yield bonds, but current coupons will serve to cap future returns and offer little protection in the (somewhat unlikely) event the credit…
Executive Summary Co-investing is gaining popularity and theoretically offers investors cost advantages and higher return potential. This report frames the opportunities and common pitfalls of co-investing, leveraging our aggregated data on co-investments and funds generating co-investment. Our analysis shows that co-investment returns have the potential to outpace private fund investment returns. Of over 100 buyout co-investments…
Over periods of prolonged prosperity, the economy transits from financial relations that make for a stable system to financial relations that make for an unstable system. —Hyman Minsky, “The Financial Instability Hypothesis,” May 1992 Stability Is Destabilizing —Minsky T-shirt Over the past several years, one of the most interesting market developments has been the virtual…
In this edition of C|A Answers, two members of our research team debate the potential for persistent deflation in the United States. Sean McLaughlin: No. The recent dip into deflation for the “headline” US Consumer Price Index (CPI) is likely to be short-lived and does not significantly increase the likelihood of persistent deflation. Headline inflation…
The fast-growing but still limited liquid alternatives product suite is unappealing today for most institutional investors, when compared to the broader hedge fund landscape. In certain limited instances the strategies could have a role to play in some portfolios: For investors with small pools of assets that cannot access hedge funds directly, liquid mutual fund…
A subdued growth outlook and increased volatility for many asset classes mean investors should be cautious in 2015 We continue to have concerns about the Australian macro environment and expect muted growth and inflation in Australia. China’s rebalancing economy is a top concern for Australia, combined with uncertainties in the domestic economy. Fair valuations and…
New Zealand’s economy is well positioned compared to other major economies, and especially relative to Australia, but external factors will likely impact the local economy and markets New Zealand equities are within our fair value range, though they are getting more expensive. Investors should maintain neutral allocations and, in their foreign equity exposure, overweight European…
This year we’ve added new exhibits on asset-class level performance and outperformance versus policy benchmarks. We also closely analyzed “net flow rates,” a measure of endowment health, which incorporate investment performance, endowment spending, and inflows that come in as gifts, and other funds designated for long-term investment. As with the past year, this report also…