Investors are facing a challenging period for earning what they spend and achieving adequate portfolio diversification. With most DM sovereign bond yields near or below zero, expected returns for bonds are at all-time lows and diversification qualities are constrained. In this edition of VantagePoint, we evaluate defense and diversification options to identify a modern approach to diversification in this low-yield era.
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We bring deep experience to serving the unique investment needs of complex asset-and-liability-sensitive pools including insurance firms, government entities, and other trusts and investment portfolios. In doing so, we focus on maximizing results for each valuable unit of risk and capital. We think holistically, balancing the interaction of risk-hedging reserves and growth-oriented, surplus portfolios to optimal effect, and leveraging our firm’s full resources to the client’s best advantage.
We serve a diverse group of portfolios with complex asset and liability pools, including insurance firms; governments and sovereign wealth funds; pension plans; and settlement, NDT, and other specialized funds. Each client team is led by a senior investor and backed by expert investment professionals. Together, this team partners with each client to help refine strategic priorities and understand their trade-offs. This process helps us to ensure that every investment decision is informed by the portfolio’s unique requirements and reflects what we believe will most effectively achieve its goals.
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The American Rescue Plan Act (ARPA) was signed into law on March 11, 2021, and included a variety of plan sponsor–friendly changes to single-employer and multiemployer pension plans, but no real help for public sector plans. ARPA may change the future landscape of US pension plans, which may prompt plan sponsors to modify their investment strategies to achieve plan objectives. Its impact will vary greatly, both by plan type and individual plan circumstances.
Yes, because rising concentration reflects rising valuations for the largest stocks, which are likely to serve as a headwind to index returns. Further, the growing market share of these companies increases the potential for rising regulatory oversight.
Investors have predominantly relied on developed markets sovereign bonds for defense in balanced portfolios, but low rates have diminished their diversification characteristics.
The virtual Private Investments Summit features a series of sessions where Cambridge Associates and industry thought leaders examine approaches to harnessing the long-term nature of private investments for program benefits while maintaining a consistent path through an ever evolving and volatile market environment. To view the session replays, visit the website link below.
Interest in China’s onshore bond market has been rising steadily since the market was thrown open to foreign investors. Yet foreign holdings remain relatively low. We think the market warrants further attention from global investors, given Chinese bonds continue to offer higher yields and lower correlations than those found in other major bond markets, with the potential to bring portfolio diversification benefits.
In this episode, we discuss the heightened focus on sustainable investing as well as a few key trends that will have implications for investment portfolios. We also talk green-washing within the industry and how to identify asset managers who are incorporating sustainability into their investment process effectively.