Services Tags: Asset Allocation

Rebalancing Position Paper

Regularly rebalancing portfolios is one of the key duties of trustees and other fiduciaries responsible for managing an institutional portfolio. Asset allocations are set to provide a predetermined risk/reward profile that fits a fund’s objectives and constraints. Portfolios are rebalanced when they drift away from policy target in order to maintain the risk/reward profiles implicit in the original asset allocations. But how often should clients rebalance their portfolios? What guidelines should clients use to determine when to rebalance? And what are the costs and benefits associated with rebalancing? This paper takes a rigorous look at rebalancing and provides some guidelines for implementing a rebalancing policy.

Download PDF >

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.

 

Deciphering the Bond Markets: How Much Duration and Credit Risk Should I Take?

2018 Investment Symposium flash talk by Ben Mohr, CFA

Given the current fixed income environment of rising rates and tight credit spreads, investors are questioning how much interest rate risk and credit risk they should hold in their portfolios. This session addresses the questions of how much duration (interest rate risk) and credit risk investors should take by examining current market conditions, anticipated changes, and an overall assessment of where we are in the credit cycle.

A summary of this flash talk can be downloaded here.

Getting “A” Share of the Chinese Market

2018 Investment Symposium flash talk by David Hernandez, CFA

This year, index provider MSCI began including China A-shares in the emerging markets equity index. While A-shares currently only constitute 0.8% of the benchmark, we expect that number to grow over time. In this flash talk, we will discuss what China A-shares are and how U.S. investors have traditionally accessed the Chinese market. We will review how A-shares are different from other Chinese investments, why institutional investors should take note of them and what the future may look like given their potential to impact institutional portfolios.

A summary of this flash talk can be downloaded here.

Evolving Private Market Landscape: The Institutional Shift from Public to Private Markets

2018 Investment Symposium flash talk by Derek Schmidt, CFA, CAIA

Investors are adapting to an investment landscape altered by a 46% decline in the number of publicly traded companies and the emergence of less expensive passive investment opportunities. These changes have shifted record levels of capital into private equity as investors have pursued attractive investment opportunities in small companies. We will discuss how the private equity market has responded to increased investor demand and will attempt to identify where institutional allocations may be headed and where to find the best opportunities for returns within this increasingly diversified private market.

A summary of this flash talk can be downloaded here.

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.

Download PDF >

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.

Download PDF >

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.

A “Halftime” Review of Asset Allocation for 2018

As of June 30th, the Russell 3000 index was up only 3.2%, a far cry from its 10-year annualized return of almost 9%; the MSCI ACWI ex-U.S. ­— a broad proxy for international stocks — has been even more disappointing, down 3.8% compared to its 2017 return of 27%. Furthermore, most bond strategies are negative for the year, thus dispelling the notion of diversification. However, the year is only halfway complete and as we have seen repeatedly in the capital markets, fortunes can change rapidly and unpredictably. In an effort to formulate explanations and expectations, the following newsletter investigates the disappointing performance from the first half of the year, as well as potential outcomes for the remainder of 2018.

Download PDF >

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.

Socially-Responsible Fixed Income Investing

Socially-responsible investing (SRI) is one of the fastest-developing segments of investing and we see a ballooning trend of true action taken by investors. Specifically for fixed income, socially-responsible investing is growing and a great deal is evolving in the recent landscape, particularly in terms of philosophical changes as well as the development of new products where “the rubber meets the road.”

This white paper explores trends in socially-responsible fixed income investing and assesses the challenges. In addition, we examine the prevalence of Environmental, Social, Governance (ESG) issues and compare their uses in fixed income versus equities. Finally, we evaluate methods to invest in fixed income for the responsibly-minded investor.

Download PDF

 

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.

U.S. vs. Non-U.S. Equity Allocation: Does Parity Make Sense?


Flash talk by David Hernandez, CFA, at Marquette’s 2017 Investment Symposium

In this session, we cover U.S. vs. non-U.S. equity allocation. Starting with the basics in determining an equity allocation, we examine both the historical and projected risk/return analysis for U.S. and non-U.S. equity. What are different types of investors doing with their equity allocations? How does diversification improve the risk/return profile? Are we nearing the end of the U.S. outperformance cycle?

 

 

High Yield Position Paper

Originally released in June 2011, this update to our position paper clarifies the myths about the asset class, and sheds light on the benefits and risks of high yield bonds.

The paper examines the history of high yield bond issuance, features of high yield bonds and their indices, their risks and characteristics, high yield historical returns and correlations, and how to invest in high yield bonds including relative valuation and manager selection.

Download PDF