Category: Newsletter

The Latest Key Developments in the Healthcare Industry

Health systems today face significant challenges, further complicating an ever-changing landscape. Some of the most notable trends we see in the space include:

  • Higher interest rates, which impact borrowing costs as well as investment opportunities;
  • Efforts to gradually repeal the Affordable Care Act (“ACA”);
  • The emergence of value-based payment programs;
  • The advent of major vertical integrations such as CVS-Aetna;
  • A growing demand for digital healthcare

The following article summarizes these key issues for health systems and where appropriate, provides some potential solutions.

Read > The Latest Key Developments in the Healthcare Industry

With over 20 years of healthcare investment consulting experience, Marquette serves healthcare clients across a broad range of operating cultures — including health systems, stand-alone hospitals, and specialty organizations — and with a variety of focus areas — including operating funds, retirement planning, insurance, endowments, and foundations. For more Marquette coverage of the healthcare industry, please see our previous newsletter Healthcare Organizations’ Top 3 Investment Concerns for Balance Sheet Assets.

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Yield Curve Inversion Intensifies: Will This Time Be Different?

An inverted U.S. Treasury yield curve — one in which long term rates are lower than short term rates — is known by investors to be a predictive indicator of a market correction and subsequent recession to come. On Friday, the yield curve inverted between the one-month to one-year range vs. the 10-year for the first time since 2007, with the one-month to one-year range yielding 2.45%–2.49% vs. the 10-year yielding 2.44%. This is an extension of the inversion between the two-year and five-year, which began last December.

In this newsletter, we put the current yield curve inversion into historical context, examining the indicators of previous inversions and the various market corrections and recessions that have followed. We also look ahead, taking into account current optimism regarding Fed rate cuts and various other indicators in the credit markets, and note how investors can prepare for further changes.

Read> Yield Curve Inversion Intensifies: Will This Time Be Different?

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

MSCI Plans to Increase China A-Share Exposure

After several years of consideration, in May 2018 MSCI added a small portion of the China A-share market to its Emerging Markets Equity Index using a 5% inclusion factor. After additional consultation following that successful implementation, MSCI recently announced plans to further increase the inclusion factor to 20% in three steps, with the final step occurring in November 2019.

This newsletter explains MSCI’s considerations in increasing the inclusion factor and the process the index will undergo in the next nine months to implement the increase, as well as an explanation of what an A-share is and what their future may hold for investors.

Read> MSCI Plans to Increase China A-Share Exposure

For further coverage on A-shares, reference our video from 2018’s Investment Symposium, “Getting “A” Share of the Chinese Market“, or two previous charts of the week linked above.

 

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

2019 Market Preview

Coming off a difficult 2018, investors face a litany of questions going into this year, whose potential answers will undoubtedly have an impact on the capital markets. The following set of newsletters examines the primary asset classes we cover for our clients, with in-depth analysis of last year’s performance and more importantly, trends, themes, and projections to watch for in 2019. We hope these materials can assist you and your committees as you plan for the coming year, and please feel free to reach out to any of us should you have further questions about the articles or wish to review the 2019 Market Preview Webinar recording. Here’s to a better year from the capital markets in 2019!

U.S. Economy: The View from the Top?
by Jeffrey Hoffmeyer, CFA, Lead Analyst, Asset Allocation

Fixed Income: Kicking Off the Year with Moderate Valuations, a Less-Hawkish Fed and Growing Global Tariffs
by Ben Mohr, CFA, Senior Research Analyst, Fixed Income

U.S. Equities: The Pro-Growth Narrative Fizzles Out
by Samantha T. Grant, CFA, CAIA, Senior Research Analyst, U.S. Equities
and Rob Britenbach, CIPM, Research Analyst, U.S. Equities

Non-U.S. Equities: Can They Get Back on Track?
by David Hernandez, CFA, Senior Research Analyst, International Equities
and Nicole Johnson-Barnes, Research Analyst

Real Estate: Navigating Through a Late Market Cycle
by Jeremy Zirin, CAIA, Senior Research Analyst, Real Assets

Infrastructure: Stable Cash Flows in an Uncertain Market Environment and the Evolving Landscape
by Jeremy Zirin, CAIA, Senior Research Analyst, Real Assets

Hedge Funds: Is Market Volatility Here to Stay?
by Joe McGuane, CFA, Senior Research Analyst, Alternatives

Private Equity: Poised for Robust Deployment
by Derek Schmidt, CFA, CAIA, Senior Research Analyst, Private Equity

 

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Keeping the Current Market Correction in Perspective

Over the last few months, equity markets have experienced sizable drops, making many investors wary about the future. Despite this, we encourage our clients to focus on the longer-term return patterns of their portfolios, since most are of a perpetual nature.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Fourth Rate Hike of 2018; More to Come?

On Wednesday, December 19, the Federal Reserve executed its fourth rate hike of 2018. This 25-basis point hike, the ninth post-2008, takes the fed funds rate target range to 2.25%–2.50%. The market expected this hike and was focused on whether Fed Chair Powell, by going forth with the hike, might be showing his defiance against Trump’s urge not to hike.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

What Happened to International Small-Cap Equities This Year?

This year’s non-U.S. equity returns have been disappointing, particularly for developed small-cap, with the MSCI EAFE small-cap index down 17.6% through December 18th. The following is a high-level review of why the asset class has struggled so much this year.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

An October to Forget?

Stock markets around the globe “corrected” in October, experiencing a sudden and broad-based drop. The sell-off was somewhat unusual as there was no glaring fundamental event that triggered the market drop, but rather a confluence of events that all seemed to come to the forefront of investors’ minds simultaneously. These concerns, coming on the heels of a strong third quarter for stocks that left the market looking modestly overvalued, led to an unpleasant month of returns.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Emerging Markets Equity — Reason for Concern?

After a strong 2017, emerging markets (“EM”) equities have struggled to keep pace with their U.S. counterparts in 2018. Year-to-date through August 31, 2018, the MSCI Emerging Markets equity index has underperformed the S&P 500 by 17.1%. EM equities gave up an 8.3% gain in January with a streak of weakness from February through August.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

New Communication Services Sector

Effective after market close on September 21, 2018, S&P Dow Jones Indices and MSCI Inc. will implement a significant revision to the Global Industry Classification Standards (GICS) structure. The telecommunication services sector is scheduled to undergo an expansion that will include several companies currently housed within the consumer discretionary and information technology sectors. The newly broadened telecommunication services sector will be renamed communication services and will contain two broad industry groups: telecommunication services and media & entertainment. The media industry group, previously categorized under consumer discretionary, will move to the communication services sector and be renamed media & entertainment. The reclassified media & entertainment industry group will contain a variety of industries engaged in modern media and entertainment channels. The purpose of this GICS structure change is to broadly include companies within one sector that facilitate communication and offer related content and information through various platforms. The change is an acknowledgement of consolidation occurring and overlapping services provided today within the media, telecommunications, and internet industries.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.