Investment Topic: Credit/Fixed Income

Research Note November 2019
Liability-Hedging Strategies for US Plan Sponsors in the Low Interest Rate Era

As sponsors of US single-employer defined benefit plans know all too well, interest rates have experienced dramatic swings in recent years. While many plan sponsors have adapted to this environment by strategically hedging their liability interest rate risk, many are still questioning the efficacy of doing so — especially when interest rates appear to be low. Yet, failing to hedge long-duration liabilities with long-duration assets is a risky endeavor that exposes the plan sponsor to significant downside risk.
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Research Report November 2019
Outlook 2020: Ten Investing Themes for the Coming Year

This year’s returns have been driven more by what has not gone wrong than what has gone right. Slowing economic growth and lackluster earnings have not shifted investors’ focus from dovish central banks and a slight easing of geopolitical risks. It is an open question whether investors will remain so sanguine in 2020. Our Outlook 2020 highlights ten themes for the coming year, with a focus on key macro questions, emerging opportunities, and risks.
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Pension Series November 2019
Pension Schemes in Pursuit of Income, Growth, and Diversification

A universal approach to portfolio construction can help schemes achieve required return targets whilst adding additional upside from alpha generation; reduce risk through true diversification; and generate sufficient income to comfortably meet both planned and unplanned cashflow needs.
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Research Report July 2019
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.
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Research Note July 2019
Stress and Losses Among Middle-Market Senior and Unitranche Loans: Introducing Cambridge Associates’ New Database

As part of our ongoing commitment to alternative credit, Cambridge Associates (CA) began compiling a database of credit stress and losses in one of the largest strategies within private credit, senior debt (i.e., direct lending). Our initial outreach in the United States and Europe yielded data from 11 senior debt funds tracking material document modifications (which we use as a proxy for credit stress, greater detail below) and loss rates in bilateral and clubbed middle-market lending.
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CA Answers July 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.
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