To herd investors into junk bonds and equities was no trouble at all—ZIRP and QE and a little rhetorical encouragement did the trick. To manage a comprehensive exit from those overvalued positions will prove a tougher undertaking. —James Grant, Grant’s Interest Rate Observer, August 8, 2014 For another example, please see our June 2, 2014,…
In addition to summarizing asset allocation, total investment performance, and payout characteristics for 118 of Cambridge Associates’ foundation clients, this year’s report takes a closer look at additional portfolio attributes and investor trends relevant to clients. Included in the report are exhibits on performance attribution, risk analytics, and policy portfolio benchmarking. We also highlight private…
On 18 September, Scotland will vote in a referendum on whether to break away from the United Kingdom. The ‘Yes’ to independence campaign is led by the Scottish Nationalist Party (SNP) and its wily leader Alex Salmond. The ‘No’ camp is run by a motley collection of UK politicians under the banner of ‘Better Together’,…
Most endowed institutions seek to provide continued (or growing) financial support for their operations while at the same time preserving the endowment’s value for the future. At its core, a spending policy is designed to balance the needs of both current and future generations, though getting the right balance can be a challenge. The precipitous…
In this issue Our new feature called “Cambridge Conversations” aims to give clients deeper knowledge of the people leading our firm. In this issue, we profile David Jallits and Global Investment Research. Dave discusses Global Investment Research in general, explains how we identify and capitalize on new ideas, and outlines his vision and philosophy for…
Most emerging markets debt assets are not priced to achieve investors’ objectives Over the last decade EM currencies have appreciated significantly against the US dollar in real terms and seem unlikely to generate attractive returns going forward given limited carry. Local currency EM sovereign bonds have attractive nominal yields, but real yields, which drive returns,…
This question has been asked since 2009, and despite the unwavering unanimity of economists and market watchers that sovereign bond yields are once again set to rise—the latest Wall Street Journal survey, for example, shows 100% of economists expect the US ten-year yield to rise by the end of 2014 (average forecast: 3.04%), June 2015…
Given that credit creation is the raison d’être of modern central bankers, the fact that European bank lending remains anemic despite a plethora of new measures from the European Central Bank (ECB) seems to us substantial cause for concern. The ECB’s pronouncements and alphabet soup of new programs have been remarkably effective at bringing down…
On August 8, President Obama signed the Highway and Transportation Funding Act of 2014 (HATFA-14) into law, thereby temporarily maintaining the solvency of the Highway Trust Fund. Approximately two-thirds of the financing for the law came not from transportation-related sources, but rather from an extension of the relief granted in 2012 to single-employer pension funds…
The market for labeled green bonds—bonds whose proceeds are specifically “ring-fenced” for environmental or climate mitigation or adaptation projects—has grown rapidly since the first green bond issue in 2008. Growing diversity of issuers, larger average issuance size, and estimated full-year 2014 issuance of $40 billion (half in corporates) all suggest that the green bond universe…