Services Tags: Investment Consulting

Certainty Over Uncertainty: Biden Nominates Powell for Another Term as Fed Chair

In a move especially pivotal given today’s elevated inflation as the economy is resuscitated out of the pandemic, President Joe Biden announced yesterday morning (November 22nd) that he would nominate the incumbent Jerome Powell for another term as Chair of the Federal Reserve. Additionally, Biden nominated Lael Brainard as Vice Chair. Both Powell and Brainard had been under consideration for the Chair role in uncharacteristically lengthy deliberations on the part of Biden, who had interviewed both for the position on November 4th.

This newsletter provides background on Powell and Brainard, covers the market reaction to Biden’s announcement, and analyzes expectations for interest rates and inflation in the coming years.

Read > Certainty Over Uncertainty: Biden Nominates Powell for Another Term as Fed Chair

 

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.

Defined Contribution Plan Legislative Update – 4Q 2021

This legislative update covers Congress’ continued negotiation of retirement legislation with the hope of finalizing Secure Act 2.0 early next year; as it stands, there are two legislative bills proposed by the House and Senate. We also review updates from the Department of Labor on a proposed rule entitled Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights that would allow plan participants to consider environmental, social, and governance (ESG) factors when selecting investments and exercising shareholder rights; recent cybersecurity guidance from the Department of Labor; an upcoming review and report by the Government Accountability Office for Congress on Target Date Funds; and 2022 contribution limits issued by the IRS.

Read > 4Q21 DC Legislative Update

 

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.

Holiday Supply Chain Woes Linger

Headlines continue to buzz with worries of supply network dysfunction that seem to span every link of the chain, from truckers and shippers to commodities and semi-conductors. Clearly, the delicate balance of supply and demand is off kilter. Supply chain disruptions began when global economies locked down amid the outbreak of COVID-19, and the problem has only been exacerbated by stop-and-start re-openings that have taken place in recent months.

This newsletter seeks to understand current supply chain dynamics and what they might mean for investors and consumers alike as we move into the holiday season. We cover the three-prong problem of prices, transport, and labor, which market participants will likely feel the squeeze tighter than others, how companies have continued to grow their margins, inflation considerations, and what to expect in the short and long term.

Read > Holiday Supply Chain Woes Linger

 

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.

Is the 60/40 Portfolio Dead Forever?

Model portfolios — or those which adhere to a specific set of guidelines surrounding asset allocation and rebalancing — are often utilized by investors because of their rules-based nature, which eliminates the need for constant monitoring. One such model is the “60/40 portfolio,” which consists of a 60% allocation to diversified equities and a 40% allocation to a broad basket of fixed income securities. Due to the imperfect correlation between stock and bond returns, the 60/40 model has enjoyed decades of success at both providing its users with strong absolute returns and suitable protection during market drawdowns. Additionally, there is an intuitive attraction of the 60/40 portfolio due to its relative simplicity of holding just stocks and bonds as its underlying investments. That said, skepticism abounds regarding the model’s viability going forward in light of the current interest rate environment and low forecasted equity returns, particularly for those investors like endowments and foundations with specified spending requirements.

The aim of this paper is to assess the effectiveness of the 60/40 model going forward and provide guidance to investors whose spending targets require an expected return that is consistent with the historical performance of 60/40 portfolios, which has typically hovered around 8%.

Read > Is the 60/40 Portfolio Dead Forever?

 

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.

Q3 2021 Market Insights Video

This video features an in-depth analysis of the third quarter’s performance by Marquette’s research team, reviewing general themes from the quarter and risks and opportunities to monitor through the end of the year. 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.

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What Are the Ramifications of a Debt Ceiling Breach?

With an agreement finally showing promise to resolve the U.S. government’s potential and impending debt ceiling breach, investors are assessing how this development might affect underlying portfolios. The debt ceiling is the maximum level that the U.S. government is permitted to borrow. This threshold was set by Congress over 100 years ago to make sure government borrowing does not reach excessive levels. Historically, every time the ceiling has been close to being breached, Congress has legislated a higher debt limit. However, the current situation is especially concerning given how close to the deadline we are and how contentious this issue is in Congress right now.

This newsletter examines the key issues of the debt ceiling, important dates both past and present, and the potential impact of a breach.

Read > What Are the Ramifications of a Debt Ceiling Breach?

 

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.

China: Evergrande and Another Move Down

In August we released our newsletter China: From Leader to Laggard, in which we reviewed how China transformed from a top-performing country to a bottom-performing country between 2020 and 2021. We noted that increased regulation was a key reason for this change as new government policies have spooked investors. We highlighted that China has gone through these periods of regulatory change in the past and opined that the market would continue to be jittery over the next six to twelve months before recalibrating to the new environment.

Since then, Chinese equities have continued to fall as global investors focused their attention on Evergrande Group (Evergrande), a Chinese property developer. In this newsletter, we provide a synopsis of the Evergrande story and discuss the market risks.

Read > China: Evergrande and Another Move Down

 

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.

IIDC Commitment to Firm Diversity Data Reporting

The Institutional Investing Diversity Cooperative (IIDC), of which Marquette is a founding member, announced yesterday that its 24 members will begin reporting individual firm diversity statistics using the same definitions and standards the IIDC set for traditional asset managers. The objective of this effort is to help institutional asset owners understand the diversity practices and demographics across the critical vendors in their investment program.

Marquette is committed to advancing diversity within our company and in our industry. We are proud to stand with our fellow IIDC members in fulfilling the mission of the group through this important initiative.

For more information, read the full release on the IIDC website here.

Build Back Better Act: Proposed Tax Changes by the House Ways & Means Committee Legislative Update

The House Ways and Means Committee released 881 pages of a proposed bill that would make changes to the tax code impacting income, estate, and gift taxes on September 14th, 2021. The bill will most likely see some changes to reach a majority vote in the Senate, but even with some revisions to the current proposal, major tax reform is expected in 2022. In this legislative update, we provide a summary of potential tax code changes based on the most recently available information.

Read > Build Back Better Act: Proposed Tax Changes by the House Ways and Means Committee Legislative Update

 

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.

Glenn Ross Named 2021 Knowledge Broker by CIO Magazine

Announced last week, Partner Glenn E. Ross has been named to Chief Investment Officer’s 10th annual list of the world’s most influential investment consultants and advisers as a 2021 Knowledge Broker. CIO assembled their 2021 list by surveying a group of respected chief investment officers, asking who they would recommend to their peers for reliably on-target suggestions, particularly considering COVID-19 and the past year of unusual market activity. For more information, read their announcement here.

Glenn has 40 years of experience in investing and consulting and is the co-author of How to Select Investment Managers & Evaluate Performance: A Guide for Pension Funds, Endowments, Foundations, and Trusts, published by Wiley & Sons, in 2007. An owner of the firm, Glenn joined the company in 2013 through the merger with Archstone Portfolio Solutions, which he co-founded in 2006. He serves as the primary investment consultant on several of the firm’s relationships.