Category: Newsletter

1Q 2009 Investment Perspectives

Understanding Sovereign Wealth Funds
Sovereign Wealth Funds (SWF) were first introduced as an investment vehicle more than seventy years ago, but their popularity has greatly increased over the past two decades. Although SWF have received criticism regarding their political involvement and influence over sector growth, economists believe more countries will start to introduce and further expand their involvement in SWF. Since SWF are becoming larger players in global financial markets, it is important to understand the motivation, structure and main players in the SWF arena.

Stimulus Bill Signed into Law, Mortgage Relief Plan Unveiled
Two major programs designed to halt the negative momentum of the financial crisis were recently announced: the stimulus bill and the Homeowner Affordability and Stability Plan. If successful, both of these initiatives could help reverse the direction of the current economy and restore positive growth. In the following, we summarize the highlights of each announcement.

Download PDF

2Q 2009 Investment Perspectives

SEC and DOL Discuss Target Date Funds
Over the course of the past several years target-date funds (TDFs) have grown in popularity amongst participant-directed retirement plans. TDFs offer investors the benefit of asset class diversification while rebalancing the asset allocation automatically as the investor progresses along the glide path. As the investor approaches retirement age, the portfolio’s equity exposure is methodically reduced over time according to the glide path, and replaced with more conservative, less volatile asset classes such as bonds, inflation-protected securities, and cash. The glide path dictates at what ages, and to what extent, the asset allocation is modified, in effect transferring the responsibility of portfolio management from the investor to a professional money manager.

Are Equities Poised for a Rebound?
Whenever we are asked for guidance on the stock market, we find it useful to look at long-term data to reveal trends and conclusions. In the following, we examine historical and current market data, along with macroeconomic figures. Collectively, our analysis provides evidence that current equity market conditions may have reached their bottom, and a recovery could be sooner than many expect.

Download PDF

2009 Market Preview

Our fourth quarter Investment Perspectives Newsletter provides an overview of 2008’s turbulent events in each asset class. We also highlight potential investment opportunities going into 2009.

No opening sentence can convey how difficult a year 2008 was for the financial markets. Most domestic equity indexes suffered losses over 35%, international stocks were crushed, fixed income prices dropped off a cliff as yields spiked, real estate values continued to fall and hedge funds blew up while getting hit with redemptions; it was the classic “correlation goes to one” as all asset classes delivered painfully negative returns. In total, close to $29 trillion was lost as a result of the global equity market declines. The only safe haven from the market carnage was in U.S. Treasuries, and investors flocked in droves, even accepting a negative yield on T-Bills for the comfort of (mostly) preserving the principal value of their assets. This “flight to quality” was representative of the fear running through investors as they took their money and made a mad dash for the exits. Their exit along with forced selling (“deleveraging”) and limited liquidity from hedge funds, investment banks and other speculators collectively fueled the second worst calendar year return on record. The only worse year was 1931 when the S&P 500 fell 43.4% in the midst of the Great Depression. Although the economy has not dipped to Depression-era lows, 2008 was a painful year.

Download PDF