Category: Newsletter

The Impact of Artificial Intelligence on Markets

Over the last several decades, artificial intelligence (“AI”) has evolved from a theoretical concept into a transformative force across a variety of industries. The 1940s saw the advent of the digital computer, which was followed years later by the first artificial neural network, a computational model inspired by the structure of the human brain that consists of algorithms that attempt to recognize relationships in data. In more recent years, researchers have developed “deep learning” systems (i.e., neural networks with many layers) capable of increasingly complex tasks including image recognition, reading comprehension, and predictive reasoning. Given the advances in the space, it should not come as a surprise that the use cases of artificial intelligence are now vast, with AI tools now implemented across fields including health care, retail, finance, and entertainment. Researchers and corporate executives are not the only ones to have noticed the remarkable potential of AI, however, as investors have flocked to the space in droves over the last several years.

This newsletter outlines the growth of AI as an investment theme, including performance, valuations, and earnings growth of AI-related companies and equities, other segments of the market that may stand to benefit from advances in AI, and potential risks for investors.

Alternatives in Defined Contribution Plans

On August 7, 2025, President Trump signed an executive order to expand alternative investment access in defined contribution retirement plans (e.g., 401(k) plans). This order instructs the Department of Labor (DOL) to reexamine its guidance to plan sponsors incorporating alternative investments into these types of retirement plans. According to the order, the six classes of alternative assets included are:

  • Private markets investments, including private equity and private debt
  • Real estate
  • Actively managed vehicles investing in digital assets
  • Commodities
  • Infrastructure
  • Lifetime income strategies, including longevity risk-sharing pools

Treasury Market Creates a Balancing Act

Despite the U.S. economy’s impressive growth in recent decades, the federal government currently faces elevated borrowing costs to fund its persistent budget deficits. While current bid-to-cover ratios remain robust in absolute terms, a declining trend in shorter maturities could represent one early warning sign that the traditional investor base demand is waning.

This newsletter examines the Treasury’s challenge of balancing funding costs with market demand and potential fiscal and monetary policy implications.

Why Are Emerging Markets Investors Removing Their China Exposure?

Emerging markets (EM) equities have gone through cycles of performance throughout time, creating varied investor sentiment towards the asset class. Recently, discussions around excluding China from investment portfolios have become more common, spurring the growth of active EM ex-China strategies. This newsletter explores the current landscape of EM investing, examines the drivers of the EM ex-China trend, and analyzes the performance impact of removing China from an EM allocation.

What Has Private Equity Done to Small-Cap Stocks?

Private markets have grown exponentially over the last two decades, driven by attractive long-term returns, diversification benefits, and early-stage value creation. As companies stay private longer, much of their initial growth can be realized outside of public markets, which could challenge the small-cap premium and contribute to a shift in the composition of public markets. The following newsletter examines this dynamic and potential impact on small-cap stocks.

As Real Estate Finds Its Bottom, Alternative Sectors Become More Prominent

Since the onset of the pandemic, the commercial real estate market has experienced significant volatility — first benefiting from a post-pandemic surge, then grappling with a sharp downturn, and now showing signs of stabilization. With the third quarter of 2024 marking the first quarter of positive returns after eight consecutive quarters of losses, the fourth quarter performance added to the case that the asset class has found a floor. This newsletter outlines recent improvements not only across traditional sectors but also an expanding set of alternative property sectors. These alternatives, which include data centers, life sciences facilities, self-storage, and senior housing, reflect the changing composition of institutional real estate portfolios and the growing emphasis on diversification beyond the traditional core sectors. We also explore drivers of demand, specific opportunities in alternative real estate, and value-added real estate.

Trade Turmoil: Assessing the Impact of Tariffs on Markets, the Economy, and Investors

The global trade landscape has been significantly reshaped by a series of aggressive tariffs initiated by President Donald Trump. These measures have elicited strong reactions from market participants and U.S. trade partners alike, leading to elevated levels of market volatility, souring economic sentiment, and strained diplomatic relations. While the situation is ongoing with major developments seemingly arising each day, this paper aims to summarize the events that have led to this point, detail the impact of the trade war on global markets, and provide commentary on what investors might expect in the months ahead.

The Debt and Deficit Dilemma

The new year brings a new political administration with fresh approaches and drastically different perspectives on topics ranging from immigration to foreign policy. As the Biden era exits and another Trump era begins, federal spending and the deficit persists. Borrowing began with financing the Revolutionary War, and it is as American as baseball and apple pie. The national debt clock in Manhattan has a massive figure of over $36 trillion that is owed by the government to holders of Treasuries. Talks of the deficit and debt ceiling emerge every year and politicians put off the issue rather than finding ways to reduce borrowing by increasing taxes and/or reducing spending. Will there ever be any repercussions to running such a high deficit?

While you will never see an explicit bill from the government with your family’s share due, there is a limit to the amount the U.S. can borrow without any consequences. This paper will give the reader an anatomy of the deficit and debt, consequences of running such a high deficit, and summary of the high-level solutions that have been proposed.

Multi-Asset Credit: Taking Offense From Good to Great

Before the football season began, we authored a white paper that detailed offensive and defensive elements of a fixed income portfolio. For most investors, an aggregate (core) mandate provides defense while strategic allocations to high yield, senior secured loans, and emerging market debt (EMD) are the primary sources of offense. Relative to an aggregate benchmark, this structure has outperformed over market cycles. However, just as championship teams adjust and innovate throughout a season, so too should an investor’s portfolio.

Multi-Asset Credit (MAC) strategies are single portfolios that dynamically allocate across a broad range of global credit markets to provide higher levels of income and a diversity of fixed income exposures. These mandates can serve as a single-solution credit allocation or as a credit alpha overlay in the context of a broader credit portfolio. There is no perfect definition of MAC, but what they do offer is diversification, flexibility, and ease of access and operations. While these markets are not new, investors may be unfamiliar with the mechanics of a MAC strategy and its potential benefits.

This newsletter provides an overview of MAC, including the opportunity set, allocation structure and considerations, diversification benefits, and sample MAC manager performance.

Football is in Full Swing…and Private Equity Wants a Piece!

The 2024 National Football League regular season is at its midpoint, meaning employees in Marquette’s Chicago office are enduring another challenging season from the hometown Bears. While the growth of rookie Caleb Williams is not a viable topic for a Marquette newsletter, recent developments off the football field are worth exploring in greater detail. To that point, NFL owners recently approved a measure that will allow private equity firms to purchase small stakes in teams, marking a notable shift in the league’s ownership rules. This newsletter highlights the motivations, details, and implications of this recent change.