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.
As the economic cycle progresses, the next recession draws inexorably closer, bringing with it the next downturn in the credit cycle. Recognizing this, institutional investors are increasingly considering allocations to distressed debt managers. While lumping all distressed managers into one group is tempting, different managers have meaningfully different approaches and investors’ traditional way of thinking about distressed debt managers makes timing paramount. In this paper, we offer a new way to think about distressed investing that combines three complementary sub-strategies and encourages investors to allocate across the credit cycle.
The start of the year is a good time for planning and reviewing your investment strategy. In this edition of VantagePoint, we facilitate that effort by setting the record straight on some commonly held investment myths.
The new US tax bill creates little pressure for immediate action by individual investors, even though we expect the legislation to be quite impactful.
Investors should expect more of the same in 2018, as many of the factors that drove risk assets higher this year remain in force. Still, 2017’s returns will be difficult to top for many asset classes, and investors should keep a wary eye out for unexpected inflation and geopolitical risks.
In our 2018 outlook, we review the prospects for several asset classes—developed and emerging markets equities, credit, real assets, sovereign bonds, and currencies—and share the advice of our chief investment strategist.
November’s edition summarizes two articles related to asset allocation. The first article examines the trade-off between maximizing long-term portfolio value and guarding against short-term drawdowns; the second considers how best to allocate to well-known factors.
October’s publication summarizes three articles related to the Federal Reserve. The first argues that the Fed’s decision to reduce the size of its balance sheet will have a limited impact on global government bond yields; the second argues global liquidity will remain abundant in the next few years, despite the Fed’s tightening; and the third discusses mysteries that remain from the unprecedented era of quantitative easing.
We would not seek to position portfolios specifically for tax reform as markets have already priced in some improvement in earnings from tax cuts, and the winners and losers from the proposed tax changes will not be clear until more details are provided. Global cyclical and value stocks offer better risk/reward prospects as they should benefit if tax reforms are passed, but are not reliant on such an outcome.