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Private Direct Lending or Public BDCs? Guidance for Pension Plan Sponsors

Private credit has become a popular asset class among pension plan sponsors seeking yield enhancement over their public fixed income allocations. The non-bank finance market has flourished since the Global Financial Crisis due to a more restrictive bank regulatory environment, resulting in reduced bank lending activity, and a wide range of private credit opportunities are […]

July 2023

A New Approach: How ERISA-Covered US Pension Plans Can Save on PBGC Premiums

Saving on Pension Benefit Guaranty Corporation (PBGC) premiums has long been at the forefront of many pension risk management decisions. When interest rates were near historic lows during 2019 and 2020, many single-employer plan sponsors changed their methodology for calculating these premiums to reduce their tax obligation to the federal government. Although it appeared like […]

July 2023

Don't Count Out Government Bonds Just Yet

Historically, we have recommended investors hold high-quality government bonds as a counterbalance in equity-heavy portfolios. However, in recent years, some investors have reduced their exposure to government bonds, given their low yields, in favor of cash. This was prescient in 2022. Global equities returned -16% in local currency terms, but government bonds also suffered steep […]

June 2023

European Bank Stress Adds to Economic Growth Challenges

On 20 March, investors awoke to news Swiss authorities had used emergency measures to push through a hastily arranged merger of Credit Suisse and UBS. Following two recent bank failures in the United States, the announcement raised questions over the health of European banks and the broader economy. While market pressure on another European financial […]

March 2023

US Pensions: Higher Interest Rates Call for a Fixed Income Reassessment

What a difference a year makes. In the second half of 2021, investors were talking about a potential prolonged Goldilocks market. By year-end 2022, the Bloomberg US Aggregate Bond Index had posted its worst annual return on record and the S&P 500 had experienced a substantial pullback from recent historical highs. Amid this turbulence, pension […]

March 2023

Will Monetary Policy Become Less of a Headwind for Markets in 2023?

Yes. Markets will be less vulnerable to rising rate risk next year, as the aggressive tightening that has weighed on markets for much of 2022 has moderated more recently since inflation has slowed. However, we see a pause in tightening as more likely than a pivot to easing in 2023 because inflation will be slow […]

December 2022

2023 Outlook: Interest Rates

We expect interest rates will increase in many developed markets, as implied by market pricing. But we think the Fed will hold rates in restrictive territory for longer than expected. We don’t believe any increases will prompt another European sovereign debt crisis. US Federal Reserve Pauses, but Does Not Pivot in 2023 Celia Dallas, Chief […]

December 2022

Quantitative Tightening Raises the Risks for Markets

With inflation running at multi-decade highs, monetary policymakers are united in one of the most aggressive tightening campaigns in decades. Most central banks have already significantly increased policy rates this year, and some are unwinding their massive balance sheets, also known as quantitative tightening (QT). From what we know about QT, we expect it to […]

November 2022

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