Services Tags: Defined Contribution

Stoking the Fire: The First Post-Recession Rate Cut

On July 31, 2019, the Federal Reserve cut interest rates for the first time since the 2008 Financial Crisis from a fed funds target rate of 2.25%–2.5% to 2%–2.25%. This well-telegraphed and long-expected 25 basis point cut, roughly 11 years after their last cut in December of 2008, signals a shift in the Fed’s monetary policy towards one of dovish stimulus after a period of hawkishness from 2015 to 2018 that saw the Fed raise the fed funds target rate nine times from 0–0.25% to 2.25%–2.5%.

This newsletter examines the reasons behind and the initial and potential reactions to the latest interest rate cut, including a look at unemployment, inflation, and the yield curve.

Read > Stoking the Fire: The First Post-Recession Rate Cut

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.

Second Quarter Review of Asset Allocation: Risks and Opportunities

Overall, the second quarter was positive for financial markets, thanks to strong economic fundamentals and expected Fed stimulus. Unemployment remains low at 3.7% and inflation (1.8% year over year) is near the Fed’s long-term target of 2%. However, there are increasing concerns about a global economic slowdown and early forecasts for 2Q GDP growth are around 1.5%, far lower than what we’ve seen in recent quarters. Globally, the most important trends we see are the following:

  • The U.S.-China trade conflict remains ongoing as talks between the two countries resumed, but little progress has been made;
  • The Federal Reserve is expected to cut rates in July and markets are forecasting another one to two cuts by the end of the year;
  • Business sentiment is declining ­— most notably in the PMI manufacturing index, which is now dangerously close to falling below its growth threshold;
  • Britain continues to struggle with its Brexit and elected a new PM (Boris Johnson) on July 23rd;
  • China and Europe are expected in increase their stimulus measures to combat slow growth and overall global uncertainty;
  • Late-cycle dynamics in credit and equity markets.

The impact of these trends is explored further in this newsletter as we review second-quarter performance and expectations going forward for each of the major asset classes.

Read > Second Quarter Review of Asset Allocation: Risks and Opportunities

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.

Real Estate: Where Do We Go From Here?

Over the last ten years, core real estate as measured by the NFI-ODCE has delivered an annualized return of almost 9% and has helped boost institutional portfolio returns. However, given the consensus view that we are in the late stage of the economic cycle, coupled with overall global uncertainty and moderating returns in the asset class, investors are wondering if it is time to reduce their allocation to real estate, and if so, where they should allocate these funds.

The following article strives to answer these questions by analyzing the current landscape for real estate investments, including opportunities outside of the traditional “core” strategies that have historically constituted the majority of real estate investments for our clients. Furthermore, we offer guidance on where to allocate assets outside of the real estate asset class if investors have built up overweights to the asset class over the last decade of outperformance.

Read > Real Estate: Where Do We Go From Here?

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.

When Will the SOFRing End?

Global authorities such as the SEC, Federal Reserve, European Commission and European Central Bank are currently transitioning the market’s use of LIBOR as a base rate for floating-rate securities such as bank loans, CLOs and private credit towards the use of the current front runner as a replacement: SOFR, which stands for the Secured Overnight Financing Rate.

This newsletter explains what a base rate is and how it is used in investing, why LIBOR is being transitioned to SOFR and the key differences between the two, and when the change is expected to take effect.

Read > When Will the SOFRing End?

For more coverage on LIBOR, please see our Bank Loans Position Paper and recent Chart of the Week, The Sixth Fed Hike and Rising LIBOR.

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.

Kweku Obed Speaking on Defined Contribution Plans at 62nd IFEBP Conference 11/15

On Tuesday, November 15, Kweku Obed will be speaking on the topic of defined contribution plan investment considerations at the International Foundation’s 62nd Annual Employee Benefits Conference in Orlando.

The session will discuss:

  • The use and effectiveness of target date funds
  • How many options to include in a lineup
  • The frequency of reviewing investment options
  • What to consider when changing or eliminating options and the effects

This event is designed to educate attendees on ways to support employee benefit plans and ensure they are compliant, efficient and sustainable.

For more information, please visit the International Foundation 62nd Annual Employee Benefits Conference event page.

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Sell in May and Go Away?

Global equity markets declined in May on a flurry of geopolitical news. As tensions persist, stocks are grasping to sustain their former rocket-like pace.

This newsletter details the recent trade and tariff announcements, their impact on the markets, and a look at what to expect in the remaining months of 2019.

Read > Sell in May and Go Away?

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.

Securing Retirement Through the SECURE Act

On May 23rd, with overwhelming bipartisan support, the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) passed in the House with a 417–3 vote. The bill is the first major retirement legislation since 2006 and has 29 total changes or new provisions.

The bill will impact most workers from part-time employees to small business owners to more tenured employees. In this newsletter we have outlined some of the major changes outlined in the SECURE Act.

Download PDF > Securing Retirement Through the SECURE Act

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.

Dave Smith Speaking on NAST 529 Plan Panel 6/16

On Thursday, June 16, Dave Smith, CFA will be speaking at the National Association of State Treasurer’s Treasury Management Training Symposium in New Orleans. He will be participating in the college savings track panel “Strategic Thinking for Today’s Volatile Markets”. This panel will present a broad view of asset allocation and an appropriate mix of investment options for 529 plans. It will delve into the considerations for boards as they consider the continued needs of their participants in the face of equity volatility and negligible fixed income returns. Other panelists include Rodrigo Garcia, chief investment officer, Office of the Illinois State Treasurer.

David helps to lead 529 plan guidance for Marquette Associates and is a regular speaker on related topics. Marquette provides defined contribution consulting services for more than 95 plans with $20 billion in assets, from corporate, public and Taft-Hartley clients to nonprofit and healthcare. Based on more than 20 years of experience and research, the Marquette approach to defined contribution plan stewardship focuses on helping plan sponsors adopt a robust governance and monitoring framework.

For more information about the Treasury Management Training Symposium, please visit the NAST website.

Secure Choice Views Featured in Benefits Magazine

An article by investment consultant Kweku Obed, Secure Choice: The Next Chapter in the U.S. Defined Contribution Story, was featured in the June 2016 edition of Benefits Magazine. The article discusses how several states have established or are considering establishing retirement savings plans for workers who lack access to an employer-sponsored retirement plan.

One of the newer developments in the defined contribution world, recent legislation has established secure choice programs or plans in California, Illinois, Massachusetts, Washington and Oregon. Some 20 additional states, including Connecticut, Minnesota, New York, Utah and Vermont, are exploring the adoption of secure choice legislation. Fiduciaries of these plans can take advantage of and build on defined contribution plan best practices, such as autoenrollment, autoescalation and use of target-date funds. Priority areas for secure choice fiduciaries to focus on might be negotiation of investment and administrative fees, monitoring savings and allocation trends of various participant demographics and offering guaranteed income options.

Benefits Magazine, the monthly publication of the International Foundation of Employee Benefit Plans, covers benefit issues affecting multiemployer, single employer and public employee plan representatives.

Kweku is the chair of the Marquette Associates defined contribution services group. Marquette provides defined contribution consulting services for more than 95 plans with $20 billion in assets, from corporate, public and Taft-Hartley clients to nonprofit and healthcare. Based on more than 20 years of experience and research, the Marquette approach to defined contribution plan stewardship focuses on helping plan sponsors adopt a robust governance and monitoring framework.

Download PDF >

Basics of Target Retirement Date Funds

Please join members of our Defined Contribution Services Group as they review the basics of target retirement date funds. This webinar is designed to educate clients on what target date funds are, how they can differ from peers, and how they can be evaluated. For additional target date fund coverage, reference our recent white paper, Target Date Funds: Preparing Participants for Retirement.

Live Webinar – Wednesday, May 22, 2019 – 1:00-1:30 PM CT

Please contact us for access to this video.