Services Tags: Asset Allocation

Short Duration vs. Core Bonds in a Rising Rate Environment

April 2011 Investment Perspectives

In today’s low rate environment, interest rate risk has emerged as a primary concern for market participants. Given that the Fed has held interest rates near zero for over two years, many investors are worried about the effect of an increase in rates on their portfolios. As interest rates rise, the discounted value of future cash flows to bond investors falls, causing a drop in the price of bond portfolios.

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Private Equity Position Paper

The first of a two part series, this paper provides an overview of the private equity asset class as well as recommendations and allocation guidance.

This paper is meant to provide an overview of the private equity asset class, an analysis of the qualitative and quantitative factors that should be used to assess private equity funds and determine their appropriate use in a portfolio, and lay-out and justify Marquette Associates’ position on the use of private equity funds in client portfolios. Recommendations as well as guidance towards making an allocation to the asset class are also included.

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Senior Secured Loans Position Paper

A comprehensive overview of the senior secured loans asset class, including history, return profile, risk analysis, valuation, and how to invest.

Senior secured loans have become increasingly attractive to institutional investors over time because of their floating rate coupon. Prior to 2008 they further appealed to investors because of their perceived low volatility. Though the volatility profile has evolved, senior secured loans are still an attractive asset class for many institutional investors. This paper offers a comprehensive view of the asset class, including history, return profile, risk analysis, and how to invest in senior secured loans.

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2011 Market Preview

2011 Market Preview

Overall, 2010 was a positive year for investors, as capital markets continued their upward swing and economic growth showed further signs of progress.

Most major stock indices (U.S. and non-U.S.) posted double-digit positive returns in 2010, with small caps generally outperforming large caps. The bond market benefited from another fall in interest rates, therefore delivering positive returns to all of the major indices, with sectors such as high yield and senior secured loans again recording the largest gains. Alternative asset classes had more of a mixed 2010: hedge funds disappointed, while real estate and private equity began to show signs of life. On the economic front, GDP growth continued its positive trend, while inflation remained low. Despite these facts, many questions still remain. Will the stock market experience a correction in 2011? What should we expect from alternative asset classes? Is inflation a threat to the economy? Will the unemployment rate improve?

In the following articles, we will take a closer look at each asset class, examining the major news items from 2010, as well as critical issues for 2011. Each article contains insightful analysis and key themes to monitor over the coming year, themes which will underlie the actual performance of the asset classes covered. Articles are offered for the following asset classes: fixed income, U.S. equities, non-U.S. equities, hedge funds, real estate, infrastructure, and private equity. As a launching point, we take a broad view of the economy and examine some crucial macroeconomic topics as they pertain to the U.S. economy.

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Hedge Fund Position Paper

The first of a two part series, this paper provides an overview of the hedge fund asset class as well as recommendations and allocation guidance.

This paper is meant to provide an overview of the hedge fund asset class, an analysis of the qualitative and quantitative factors that should be used to asses hedge funds and determine their appropriate use in a portfolio, and lay-out and justify Marquette Associates’ position on the use of hedge funds in client portfolios. Recommendations as well as guidance towards making an allocation to the asset class are also included.

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Real Estate Position Paper

The first of a two part series, this paper provides an overview of the commercial real estate asset class as well as recommendations and allocation guidance.

The following paper constitutes the first of a two part series on commercial real estate. This first paper seeks to establish a fundamental understanding of the asset class. More specifically, the various styles, benefits, risks, mechanics, and benchmarks relevant to commerical real estate investments are examined, with an emphasis on quantitative and qualitative illustrations. Recommendations as well as guidance toward making an allocation to the asset class are also included.

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Please also reference our 2018 Update of this position paper.

TIPS Position Paper

Analyzes the asset class in detail, and offers a recommendation for investors interested in adding the asset class to their portfolios.

Given the amount of fiscal and monetary stimulus enacted to revive the United States economy, many are concerned about inflation emerging as a credible threat to the economic recovery. While such a threat is not foreseeable in the near future, unexpected inflation can negatively impact portfolios. However, several asset classes can protect against higher than expected inflation. Treasury Inflation Protected Securities (“TIPS”) is one asset class which offers inflation protection. The following paper analyzes the asset class in detail, and offers a recommendation for investors interested in adding the asset class to their portfolios.

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Investing in an Inflationary Environment

Given the amount of fiscal and monetary stimulus enacted to revive the United States economy, many investors are concerned about inflation emerging as a credible threat to their portfolios, as inflation can reduce the real rate of return. While high inflation is not foreseeable in the near future, it is prudent to understand how to preserve a portfolio’s real rate of return during times of rising prices. Several asset classes can protect against higher than expected inflation, with varying degrees of statistical proof. The following paper examines the potential asset classes suitable for periods of high inflation, both on a qualitative and quantitative basis.

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