Elevated equity market valuations and potentially rising bond yields suggest the return environment for traditional risk assets could be difficult. Faced with this challenge, institutional investors are seeking alternative sources of return. Alternative risk premia (ARP) strategies – which harvest well-established risk premia and market anomalies across asset classes – may fit the bill. ARP…
Third quarter’s edition summarizes five articles on portfolio risk. The first article highlights the trade-offs among diversification, active risk, and excess return in active equity allocations; the second analyzes asset class correlations during tail events; the third highlights how the current state of trading liquidity could exaggerate the next downturn; the fourth argues that hedge funds do protect investors during market shocks; and the fifth reviews how commodity long/short indexes improve a traditional portfolio’s risk-adjusted return.
In this report, we briefly highlight five key post-GFC developments and discuss how investors might adapt their portfolios to these changes.
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.
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 publication, based on our biennial Investment Office Organization and Governance survey of small, medium, and large endowments and foundations, offers a snapshot of responses in three key areas: investment office staffing, oversight costs, and governance.
Second quarter’s edition summarizes five article on trade policy. The first article finds that protectionism has failed as a US policy across various time periods; the second analyzes commonly held misconceptions about trade deficits; the third argues that although the risk of a trade war has increased in recent months, it remains low; the fourth examines the difficulties in relocating supply chains across countries and regions; and the fifth quantifies the potential impacts of a US withdrawal from NAFTA.
Advice in Brief The global economy and capital markets are constantly evolving. From the industrial revolution in the 1700s, to information technology in the last 45 years, waves of innovation have had profound implications for society, the global economy, and investors. At the same time, debt cycles, demographics, and productivity trends all have a slow-moving,…
Investors with thoughtfully diversified portfolios, which incorporate sufficient liquidity, should stay the course amid today’s trade tensions.
For many pension plans, investment strategy is often structured with a liability-hedging portfolio and a growth portfolio, with the weight and composition of each determined by a strategic asset allocation or a de-risking glidepath. Within this overall structure, the construction and calibration of the liability-hedging portfolio is integral to effective pension asset management. This report focuses exclusively on the liability-hedging portfolio, delineating key considerations and best practices for single-employer defined benefit plans including those sponsored by corporations, health care institutions, non-profit organizations, and certain partnerships.