In an Environment of Declining Demographics and Slow Productivity Growth, What Investments Look Attractive?
Investments with the potential to earn returns competitive with equities—without a dependence on economic growth—are especially valuable diversifiers for portfolios. Such investments are varied, sometimes niche, and require skilled implementation. Many require some illiquidity, but may compensate by distributing income. Headline risk is also often a major consideration, so such investments are not for everyone. […]
May 2017
Do the Results of the First Round of the French Presidential Election Sound the All Clear for European Risk Assets?
Although the election results provide a powerful “risk-on” catalyst in the short term, the underlying long-term problems facing France and the Eurozone are unlikely to go away under a Macron presidency, so the old adage “sell in May and go away” may be vindicated yet again. Pro-Europe, pro-reform, centrist but party-less young candidate Emmanuel Macron […]
April 2017
A Stronger Union: Addressing the Unique Investment Challenges of Multiemployer Defined Benefit Plans
Adaptive and sophisticated strategies are necessary to serve the unique features, constraints, and needs of multiemployer plans. In this note, we explore some of the key challenges that many multiemployer plans face, discuss how to invest in light of these challenges, and provide thoughts on governance and the overall role of the investment advisor in the multiemployer context.
April 2017
Maintaining Strategic Direction through Peaks and Valleys
An extended bull market can tempt even the savviest investors into abandoning their long-term discipline. Resisting the impulse to switch horses in the middle of the race is hard, but necessary—the most important trait of successful investors is their ability to maintain discipline in sticking to a long-term strategy during good times and bad. Diversified portfolios—structured to earn returns comparable to their rate of spending at tolerable levels of risk—have benefitted long-term investors and grown their purchasing power for decades, and we have no reason to expect a different outcome when today’s bull market inevitably corrects.
April 2017
Should Investors Buy Downside Protection to Hedge Against an Equity Market Drop?
We don’t think so. Investors with diversified portfolios already have some cushion if equities sell off given holdings like fixed income, hedge funds, and other diversifying assets. Further, trying to time the market by buying derivatives or substantially reducing equity exposure is rife with behavioral risks that could see investors ceasing to purchase protection just […]
April 2017
VantagePoint: Second Quarter 2017
This quarter’s edition discusses the reflationary environment, positioning in global equities, prospects for sovereign bonds (both nominal and inflation-linked), and USD strength. We also profile two strategies that can diversify portfolios without dependence on economic growth: life settlements and pharmaceutical royalties.
April 2017
Does US Corporate Tax Reform Endanger Private Debt Strategies?
No. If the interest expense deduction is eliminated, debt issuance may drop slightly, but the demand for senior and mezzanine debt will be little changed, and the risk/reward proposition is still attractive for investors. Under the new tax regime outlined in the GOP’s Tax Reform Task Force’s Better Way “blueprint,” the highest corporate tax rate […]
March 2017
What’s Next for the US Dollar?
We still expect a rising US dollar over the coming year or so; however, the currency is entering the final phase of the strong-dollar cycle and investors should be aware that valuations and historical cycles suggest USD weakness over the coming decade. After weakening for most of 2016, the US dollar sprang back to life […]
March 2017
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