Should Corporate Plan Sponsors Continue to Hedge Liability Interest Rate Risk?
Yes, maintaining a well-hedged pension plan is prudent risk management.
Credit/Fixed Income
US Manager Universe Statistics: Second Quarter 2019
This publication presents manager performance for 37 asset classes and substrategies, showing the median, mean, and key percentiles of return. Relevant indexes for each asset class are also included to provide market context.
Whistling Past the Covenant-Lite Graveyard: A Sanity Check in Practical and Philosophical Terms
The recent shift in common wisdom with respect to covenant-lite loans hearkens the warning to be careful of changing opinions in the face of unchanging facts and steadfast opinions. This note summarizes the pro–covenant lite positions articulated to us and points out their weaknesses.
What to Expect From Your Direct Lenders When the Cycle Turns
Direct lending, or senior debt, funds have come to dominate the private credit asset class, capturing significant portfolio allocations and outpacing fundraising of other private credit strategies. However, over the past 18 months, Cambridge Associates has felt enthusiasm for senior debt allocations cool as discussions turn to senior debt funds’ performance through the credit cycle.
Review of Market Performance: Fiscal Year 2019
Fixed income assets and gold advanced, as escalating trade tensions cast uncertainty regarding the global growth outlook and global central banks sounded a more dovish tone; equities and other real assets were more mixed. This chart book presents returns and other market metrics for fiscal year 2019.
Could the Equity and Bond Markets Both be Right About the Macro Outlook?
Yes. While equity and bond markets don’t often rise in tandem like they have lately, history suggests that both recent moves could be warranted if central bank stimulus successfully extends the cycle. But that is a big “if”; several moving parts cloud the macro outlook, and markets are assuming that central banks can reverse the recent economic slowdown.
US Manager Universe Statistics: First Quarter 2019
The median US Mid-Cap Growth Equity manager posted the highest median return for first quarter 2019, returning 19.3%. For the one-year period ending March 31, 2019, the median US Real Estate Investment Trust manager posted the best return (18.8%).
The US Yield Curve Inverted! Should Investors Underweight Risk?
Although an inverted yield curve is not a sign we welcome, it also is not a clear indicator of an imminent equity market downturn. Instead of underweighting risky assets, we suggest investors take this opportunity to refresh plans to manage through the next bear market.
Decades of Data: 1900–2018
In over 40 different analyses and 100 charts, our annual report on the history of global markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds. Given the stage of the economic cycle and a shifting paradigm in central bank policy, we incorporate a current market environment section this year. The appendix to this report shows year-by-year, cumulative, and average annual compound returns for as much as 119 years of market data for Australia, Japan, the UK, and the US. Emerging markets equity returns are also included in the appendix—with 30 years of history—in USD and local currency terms.
US Manager Universe Statistics: Fourth Quarter 2018
This chart book presents representative long-only and hedge fund manager performance for fourth quarter 2018. The median US Core Bonds manager posted the highest median return for fourth quarter 2018, returning 1.4%. The median Cash Management manager posted the best returns for the one-year period ending December 31, 2018, with a return of 2.0%. The median US Small-Cap Growth Equity manager posted the lowest median return for fourth quarter 2018 (-20.4%). The median Global ex US Small-Cap manager suffered the worst performance (-19.1%) for the one-year period.