In this edition of VantagePoint, we review the shape of historical recoveries from bear markets and recessions. We believe that both a V-shaped and a disastrous L-shaped economic recovery are unlikely, with a W- or U-shaped economic recovery more probable.
Outsourced CIO (Discretionary Management)
We offer a comprehensive outsourced CIO (OCIO) service that allows clients to focus on their fiduciary responsibility and strategic goals. Our OCIO approach is built upon three core elements that we believe are critical to a successful investment program:
- An integrated partnership between the investment team and the client
- A customized portfolio built to reflect the needs of the client
- Access to managers that leverages both Cambridge Associates’ and the client’s reputation in the marketplace
With nearly 20 years of experience as a discretionary management provider, we serve as a fully resourced investment office that replicates the best practices of leading in-house investment offices. Our outsourced CIO teams are accountable for portfolio strategy, implementation, day-to-day management, and operations. Our OCIO teams are backed by a global research platform and robust operational infrastructure, providing clients with access to world-class ideas with the ability to execute in a timely and operationally efficient manner.
This service model is available for total or partial portfolios and typically works well for clients who would prefer to spend their time on establishing portfolio guidelines and monitoring the performance of the portfolio while delegating day-to-day portfolio decisions.
Our Latest Insights
It has been difficult to find a more out-of-favor sector in institutional investors’ portfolios than energy over the past five years, and with the recent spread of COVID-19 reducing demand for oil & gas, that reality appears set to continue – creating both challenges and opportunities. Amid the sector’s ongoing evolution, the energy PE investment strategy that dominated the market has become outdated, and investors who wish to capitalize on potential opportunities in this market must re-think their approach.
Pensions face critical investment and management challenges as COVID-19 impacts capital markets. For single-employer plans, we have found that liquidity, rebalancing, implementation and communication are key issues to keep in mind.
In periods of market stress, it can be difficult to rebalance, much less overweight risky assets like equities. In this paper, we review our approach using multiple lenses: magnitude and duration of drawdowns relative to history, cheapness of valuations, and presence of pre-conditions for markets to begin their ascent. Such an approach can help investors tune out the emotion and dial in on the hard data and most probable outcomes even in the face of great uncertainty. While opportunities are developing across many markets, investors should hold off on broad overweights to risky assets at this time.
Sona Menon, Head of the North American Pension Practice at Cambridge Associates, is a featured guest on this Forbes podcast to discuss the role of hedge funds in a pension portfolio, her experience as an outsourced CIO, and so much more! Listen to “FBR Featured Guest: Sona Menon” on Spreaker.
As the COVID-19 outbreak has escalated in the United States, sponsors of single employer–defined benefit pension plans have experienced a roller coaster ride. Avoiding, or at least cushioning, another wild ride requires a well-designed hedging strategy that accounts for credit spreads. We provide context for this rapidly evolving spread environment and potential responses.
March 23, 2020— As we write in March 2020, COVID-19 is spreading across much of the world, undercutting economic activity. While how this situation will unfold is not entirely clear, we have long believed that the best way to guard against future uncertainty is to have a well-constructed portfolio. One key component in that is understanding the relationship between asset prices and inflation.
Families of wealth face three key questions about intergenerational wealth planning: how best to invest to sustain future generations; how best to engage the next generation; and how best to ensure family unity endures. Often each question is addressed independently. We find that a conversation across generations about the impact of a meaningful venture capital allocation can help address all three questions in an integrated manner.