Services Tags: Defined Contribution

Matt Nowak Speaking at Pension Real Estate Association (PREA) 2023 Institutional Investor Conference 10/19

On Thursday, October 19, Matt Nowak, AIF® will be speaking at PREA’s 33rd Annual Institutional Investor Conference in Boston.

Matt will be speaking as part of the PREA Defined Contribution Affinity Group luncheon program, joining a panel entitled, “Trends in Defined Contribution Plan Design, Qualified Default Investment Options, and the Inclusion of Alternative Assets,” with several investment professionals.

The Pension Real Estate Association (PREA) is a non-profit trade association for the global institutional real estate investment industry. The Annual Institutional Investor Conference features high quality educational sessions and speakers that cover today’s critical issues as well as opportunities for meaningful interaction and dialogue between investors and managers. For more information, please visit the conference webpage.

1Q 2023 Market Insights Video

This video is a recording of a live webinar held April 20 by Marquette’s research team, featuring in-depth analysis of the first quarter of 2023 and themes we’ll be monitoring in the coming months.

Our Market Insights series examines the primary asset classes we cover for clients including the U.S. economy, fixed income, U.S. and non-U.S. equities, hedge funds, real estate, infrastructure, private equity, and private credit, with presentations by our research analysts and directors.

Sign up for research alerts to be invited to future webinars and notified when we publish new videos.
For more information, questions, or feedback, please send us an email.

Here to Stay? Fixed Income Opportunities Persist Despite First Quarter Volatility

Going into 2023, one of the primary headlines was the return of “income” to the fixed income asset class. Largely as a result of Fed policy in 2022, yields increased significantly over the course of the year, thus finally offering meaningful income to bond investors. At long last, fixed income could provide all three of its staples to portfolios: diversification, liquidity, AND income. With the Federal Reserve committed to further hikes during the first half of the year, expectations were that the opportunity set would last well into the year.

However, bank failures and the associated fear of contagion have been known to not only fuel volatility in equity and credit markets but send investors to the safety of Treasuries. This dynamic naturally drives prices higher and yields lower as investors look to insulate their portfolios from large drawdowns. That said, the Silicon Valley Bank shutdown coupled with other nervousness around regional banks and then the eventual absorption of Credit Suisse by UBS has not had a significant impact on the outlook for fixed income as of quarter end. After trading inside of 2% since 2020, the yield on the Bloomberg aggregate index closed the first quarter at 4.40%, slightly lower than the December 31, 2022 figure of 4.68% but well ahead of its near-zero value in the years leading up to 2022.

This newsletter analyzes recent market dynamics and the current environment and outlook for fixed income.

Read > Here to Stay? Fixed Income Opportunities Persist Despite First Quarter Volatility

 

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.

The 60/40 Portfolio Revisited: Back from the Dead?

In response to an inquiry concerning rumors of his demise in 1897, American writer and satirist Mark Twain quipped, “The report of my death was an exaggeration.” This quote may also apply in the case of the 60/40 portfolio and a white paper published by Marquette Associates in late 2021. The piece, entitled, “Is the 60/40 Portfolio Dead Forever?” examined the challenges faced by the popular model consisting of a 60% allocation to diversified equities and a 40% allocation to a broad basket of fixed income securities. These challenges included elevated equity valuations and the prospects of rising interest rates and slowing economic growth. Indeed, both stocks and bonds struggled mightily last year due to these and other headwinds, with 2022 one of the worst on record for the 60/40 portfolio. That said, and amid a strong start to 2023, there are reasons for optimism when it comes to the viability of the model to again generate attractive risk-adjusted performance.

This white paper provides historical context for the 60/40 portfolio, details its current outlook, and outlines ways in which investors can augment the model to achieve desired return targets.

Read > The 60/40 Portfolio Revisited: Back from the Dead?

 

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.

2023 Market Preview: Trail Guide to 2023 Asset Class Performance

As winter takes hold in the northern hemisphere, there are those that choose to escape to warmer climates and those that embrace the season and choose the mountains. Anyone familiar with downhill skiing knows that every ski trail is marked with a shape and color to designate its difficulty. For those unfamiliar with these ratings, the North American system looks like this:


Of course, weather and trail conditions can also impact a trail’s difficulty and must be accounted for when turning down the mountain: environment and terrain matter. Similarly, investment prognostications must recognize the current setting. By now, the environment is all too well known: high inflation, aggressive Fed policy, Russia–Ukraine war, labor supply shortages, and a potential recession. These topics have been covered extensively in recent letters and continue to loom over markets as we start 2023. At a high level, general consensus is that the majority of rate hikes from the Fed are behind us (two are expected for 2023 at time of writing), and inflation will continue to normalize in 2023, thus further supporting the thesis of fewer rates hikes from the Fed over the next year. If a recession comes to fruition, expectations are for it to be short-lived and shallow which reduces the long-term threat to markets.

With this backdrop in mind, we turn our attention to an asset class by asset class outlook for the coming year, assessing the degree of difficulty for each to deliver positive returns in 2023. In some cases, the difficulty will change as the year goes on — similar to trails that are “Most Difficult” for the first half and become more palatable as the journey goes on…which brings to mind a certain trail in Utah that the author found himself on last year that literally had him over his skis…but I digress. Tighten your boots and click into those skis!

Read > Trail Guide to 2023 Asset Class Performance

Download > 2023 Market Preview Report with 100+ additional charts and data, organized by asset class

Watch >  2023 Market Preview Video recording of our research team’s live webinar analyzing last year’s performance as well as trends, themes, opportunities, and risks to watch for in 2023

 

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. Marquette is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Marquette including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request.

2023 Market Preview Video

This video is a recording of a live webinar held January 19 by Marquette’s research team, featuring in-depth analysis of the final months of 2022 and a look ahead at risks and opportunities to monitor in the year ahead. Our Market Insights series examines the primary asset classes we cover for clients including the U.S. economy, fixed income, U.S. and non-U.S. equities, hedge funds, real estate, infrastructure, private equity, and private credit, with presentations by our research analysts and directors.

Download > 2023 Market Preview Report with 100+ additional charts and data, organized by asset class

Read > 2023 Market Preview: Trail Guide to 2023 Asset Class Performance

 

Sign up for research alerts to be invited to future webinars and notified when we publish new videos.
For more information, questions, or feedback, please send us an email.

The Four Virtues of Private Equity

In classical philosophy we are taught that there are four virtues of mind and character. Given the uncertainty that lies ahead in 2023, it is prudent (pun intended) to revert back to these virtues — as they relate to private equity — to outline a framework that may help investors effectively navigate the market.

  • Prudence: The ability to discern the appropriate course of action
  • Temperance: The practice of discretion, restraint, and moderation
  • Fortitude: strength, endurance, and the ability to confront fear
  • Justice: fairness

Read > The Four Virtues of 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.

The Real Game of Thrones: Evolving Geopolitical Dynamics and the Potential Impact for Global Investors

Following the Saudi-led OPEC+ announcement that the bloc will cut oil production by 2 million barrels per day, reports emerged that Saudi Arabia will soon join the BRICS alliance and deepen economic cooperation with China. Despite recent tensions with the U.S., the Kingdom’s preeminent role in the Belt and Road Initiative and potential admission to the BRICS alliance could drive global infrastructure development, technology research, and capital market expansion across global markets, potentially benefiting investors with long-term global and emerging market exposure.

This newsletter summarizes the Belt and Road Initiative (BRI) and BRICS Alliance, provides a brief history of Saudi-U.S. relations, and analyzes the Kingdom’s Vision 2030 efforts to diversify Saudi Arabia’s economy, ultimately concluding with the outlook and risks for investors.

Read > The Real Game of Thrones: Evolving Geopolitical Dynamics and the Potential Impact for Global Investors

 

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 Investor’s Holiday Wish List

Hopefully not another year of coal
In the spirit of holiday fun — and an effort to put 2022 investment returns behind us — we have put together our investor wish list for 2023. We have broken the wish list into two categories: the “must-haves,” which carry the most weight and are most observable, and the “stocking stuffers,” which may not be headline grabbers but are nonetheless impactful across economies and markets. Predictably, the “must-have” items focus on a reversal of the major trends that drove the markets this year; we “must have” a better outlook across at least some of these topics. The “stocking stuffers” category is a variety of topics that either directly impact the major trends from 2022 or are more targeted with their impact on specific asset classes. And while we recognize this is not an exhaustive list, we feel strongly that if these wishes come true we can all feel better about market returns in 2023.

This year’s must-haves:

  • Lower inflation
  • Less aggressive Fed policy leads to fewer interest rate hikes in 2023
  • Avoid a deep recession
  • Resolution of geopolitical conflicts

And stocking stuffers:

  • Broad-based earnings in the U.S. stock market
  • A weaker U.S. dollar
  • Credit defaults start to flatline
  • Slowdowns in hiring and wage growth
  • Favorable news out of China
  • History repeats itself

Read > An Investor’s Holiday Wish List

 

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.

International Equities: Waitin’ on a Sunny Day

In recent years, international stocks have underperformed their domestic counterparts by a significant margin. Specifically, the MSCI ACWI ex-US index has compounded annual returns at just 3.3% over the last decade through the end of October, compared to an annualized return of 12.8% for the S&P 500 index. This current stretch marks the longest period of relative outperformance on a trailing 5-year basis for either index since the early 2000s.

This newsletter examines a host of factors that have contributed to this pattern of performance, including differences in composition between U.S. and international equity indices, currency movements, and geopolitics and analyzes the diversification benefits of international equity allocations within portfolios despite performance challenges.

Read > International Equities: Waitin’ on a Sunny Day

 

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.