Services Tags: Investment Consulting

Value vs. Growth: Where Do We Go from Here?

In a reversal of trends that had persisted for several years, value stocks have largely outperformed their growth-oriented peers since the fourth quarter of 2020. Though many factors have contributed to this change in investor sentiment, the resurgence of more cyclical areas of the market is likely being driven by the successful rollout of COVID-19 vaccines, which appears to have ended the pandemic in the United States and allowed the domestic economy to reopen to a significant extent. With equity markets likely pricing in a full economic reopening in the coming months, many investors are wondering if recent trends are sustainable, especially given the headwinds experienced by the value factor during the last decade. The aim of this newsletter is to assess the prospects of value stocks going forward in relation to those of their growth counterparts.

Read > Value Vs. Growth: 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.

Defined Contribution Plan Legislative Update – 2Q 2021

This legislative update covers the Secure Act 2.0, provides an update on the Department of Labor’s enforcement of its final rules on ESG investments and proxy voting by employee benefit plans, reviews best practices for investment committees coming out of the disruptions caused by COVID, and examines growth and integration of Health Savings Accounts (HSAs) as offerings in defined contribution plans.

Read > 2Q 2021 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.

The SPAC Explained

The SPAC once again rose to prominence in 2020 and momentum has continued to build this year. By mid-March 2021, the number of SPACs raised had already eclipsed the total raised in 2020. SPACs, special-purpose acquisition companies, are shell companies set up to raise money to acquire another, existing company. SPAC vehicles have been around for decades but have recently risen in popularity as experienced investors and management teams have chosen this route to decrease the risks associated with a traditional initial public offering (IPO).

In this newsletter, we explain how SPACs work and are structured, typical attributes of SPAC sponsors, who benefits from the SPAC structure, why SPACs have seen such exponential growth recently, and how private equity interacts with and influences the SPAC industry.

Read > The SPAC Explained

For more Marquette coverage on SPACs, reference our recent research, What’s Next for SPACs? and The Year of SPACs.

 

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.

One Year Later, What’s Next?

Welcome to our inaugural quarterly client newsletter! As a way of introduction, I am Greg Leonberger, Director of Research here at Marquette. I have had the privilege of meeting many of you over the years, and for those that I have not worked with previously, please accept this virtual introduction; my hope is to meet many more of you in person once in-person meetings resume. As I embark on this newsletter series, the goal each quarter is relatively simple: provide you with our views on capital markets, the economy, emerging risks as well as opportunities, and hopefully stitch in a few anecdotes to make for a more engaging connection with our readers.

Highlights from this edition:

  • One year anniversary of the equity market trough in 2020
  • COVID-19: lingering uncertainty, vaccine progress, economic recovery
  • Equities update: value and small-cap outperformance, valuations, TINA
  • Fixed income: reflation trade and interest rates, spreads
  • Alternatives: opportunities in real estate, hedge funds, and private markets
  • Inflation worries: money supply and commodity prices

Read > One Year Later, What’s Next?

 

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.

Q1 2021 Market Insights Video

This video features an in-depth analysis of the first quarter’s performance by Marquette’s research analysts and directors, reviewing general themes from the quarter and risks and opportunities to monitor 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 notified when we publish new videos here.
For more information, questions, or feedback, please send us an email.

Signs of a Market Bottom: One Year Later

This month marked the somber one-year anniversary of the World Health Organization declaring COVID-19 a global pandemic. In addition to the immeasurable human suffering the disease has caused, the toll on both the financial markets and broader economy has also proven historic in magnitude. After the unprecedented market volatility in March 2020, two questions on many investors’ minds were if a market bottom had been reached and if a recession was underway. The S&P 500 hit an all-time high on February 19th, 2020, and subsequently experienced a fast and furious COVID-induced sell-off resulting in its March 23rd bear market trough. Although at that time, investors could not be certain this was the bottom as economic uncertainty remained high while the pandemic was still in its early stages. To help reason through the two questions noted above, we wrote “Signs of a Market Bottom?” which analyzed four broad categories in an attempt to identify markers of a trough: Technical Data, Valuation Data, Economic Indicators, and COVID-19 Data. This information was examined in the context of bear markets that coincided with recessions, which is an important distinction because one can exist without the other. Our analysis indicated that all but valuation data were useful in identifying a market trough.

Given that it has been over a year since the rapid peak–trough-bull market start, the purpose of this paper is to revisit the four aforementioned categories to see which, in hindsight, were relevant in identifying the 2020 market bottom.

Read > Signs of a Market Bottom: One Year Later

 

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 Joins in Founding of Investment Consultants Sustainability Working Group (ICSWG-US)

Announced today, Marquette has joined thirteen institutional investment consulting firms in the U.S. in establishing the Investment Consultants Sustainability Working Group – US (ICSWG-US). The aim of this cooperative is to promote and improve sustainable investment practices across the investment industry.

The ICSWG-US aspires to:

  • Engage across a broad range of stakeholders, including asset owners, asset managers, and regulators;
  • Seek investment outcomes that are genuinely sustainable and not a tick-the-box exercise;
  • Align with and support existing industry bodies and initiatives;
  • Support clients who lack the resources to engage directly with industry initiatives;
  • Create a guiding set of principles that identify good practice with practical advice; and
  • Be a body where regulators, policymakers, and other stakeholders can seek input when they need a view from investment consultants.

For more information, please see the full press release and ICSWG-US website.

Nichole Roman-Bhatty, CIMA®, Partner and Founder and Co-Lead of Marquette’s Sustainable Investing Group, was quoted in the release: “As we’ve seen growth from both the demand for diversity and inclusion in the investment industry as well as the number of sustainable investing solutions in the market, this new consultant initiative lends an important voice for defining best practices. The consultant community is uniquely positioned to marry investor interest with market feasibility, making this collective effort vital to developing standardization around reporting and ultimately providing a better framework towards building successful, sustainable investment portfolios.”

For more information about Marquette’s approach to sustainable investing, reference our Expertise page and research.

 

About Marquette Associates
Marquette was founded in 1986 with the sole objective of providing investment consulting at the highest caliber of service. Our expertise is grounded in our commitment to client service — our team aims to be a trusted partner and as fiduciaries, our clients’ interests and objectives are at the center of everything we do. Our approach brings together the real-world experience of our people and our dedication to creativity and critical thinking in order to empower our clients to meet their goals.

 

Retirement Basics Video Series

This video series is intended for plan sponsors and fiduciaries and covers a variety of topics related to creating and managing effective defined contribution investment programs. Co-presented by members of our consulting and research teams, these videos present the basics of retirement plans for trustees and investment staff in an educational format meant to provide guidance and insights on best practices and trends in the industry.

The series includes:

  • Fiduciary Checklist, an overview of the roles and responsibilities of fiduciaries including planning, oversight, communication, and documentation;
  • Defined Contribution Topics & Trends, industry trends and recent developments and guidance from the Department of Labor;
  • Investment Lineup Best Practices, considerations and guidance for selecting investment lineup offerings for retirement plans;
  • Target Date Funds, a deep dive into TDFs, from structure and glidepaths to why target date funds have become so popular; and
  • Stable Value Funds, an overview of stable value, exploring structure, important considerations, and recent litigation.

View each episode in the player below — use the upper-right list icon to access a specific presentation.

For more information, questions, or feedback, please send us an email.

Sustainable Investing Post-COVID Views Featured in Benefits Magazine

An article by Marquette investment consultant and partner Linsey Schoemehl Payne was featured in the April 2021 edition of Benefits Magazine. The article, Sustainable Investment Options in a Post-COVID-19 World, examines performance trends for ESG investments, the impact of recent DOL guidance, and steps for evaluating ESG performance.

COVID-19 and the resulting economic recession have created the first sustainability crisis of the 21st century. As the virus spread across the globe in late March 2020, the global economy came to a screeching hald, and stocks experienced a record-breaking decline. While no sector was left unscathed, research showed that investment strategies that integrated environmental, social, and governance (ESG) factors into their approach provided more downside protection compared with those that did not. ESG integration is a returns-based approach, using ESG factors as an additional source of information during the investment manager’s risk analysis process. This article explores the why and how of that resilience in times of market turmoil, as well as the hurdles plan sponsors should consider when selecting investments that are considered ESG or sustainable strategies.

For more of Marquette’s sustainable investing coverage, reference our research here. Linsey previously presented our video series, Sustainable Investing, an introduction to our approach to ESG integration and considerations, and has also authored several papers on the topic. An owner of the firm, Linsey has been with the company since 2016 and has 13 years of investment experience. Linsey is the vice chair of the firm’s sustainable investing group and a member of the OCIO committee. She holds a B.A. in political science from the University of Missouri-Columbia, a J.D. from the DePaul University College of Law, and an M.B.A. with honors from the University of Chicago Booth School of Business.

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.

Download PDF > Sustainable Investment Options in a Post-COVID-19 World

Reproduced with permission from Benefits Magazine, Volume 58 Number 4, pages 24-31, April 2021, published by the International Foundation of Employee Benefit Plans (www.ifebp.org), Brookfield, Wisconsin. All rights reserved. Statements or opinions expressed in this article are those of the author and do not necessarily represent the views or positions of the International Foundation, its officers, directors or staff. No further transmission or electronic distribution of this material is permitted. 

 

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.

One Year Ago, Would Anyone Have Predicted This?

What a year it has been. Officially one year after the equity market’s bottom on March 23rd, 2020, all major indices in the chart above have at least recovered back to ending 2019 levels. The groups that were hit the hardest have also rebounded the strongest, with returns over the last year exceeding 100% for some. Small-cap equities stand out, especially in the U.S. — up 121% over the last year and up 33% over the almost 15-month period since 2019. U.S. mid-cap equities are up 101% over the last year, up 25% over the full period, and U.S. large-cap equities are up 83% over the last year for a 26% return over the full period. Small-cap stocks have also outperformed internationally — the MSCI EAFE Small Cap Index is up 91% over the last year and 18% since 2019, while the MSCI EAFE Index is up 67% over the last year and 12% for the full period. Emerging markets, some of the hardest hit by the crisis last year, have more than recovered, up 78% over the last year for a 22% return since 2019. Fixed income returns have been more muted. Investment grade bonds stayed positive in early 2020 as equity markets fell precipitously and are up another 3% since. High yield bonds, bank loans, and emerging market debt were hit harder but still held up better than equities. Each group has recovered those losses but remains in positive single-digit territory over the full period.

From here, we expect returns will likely moderate. As the vaccine roll-out continues we expect further economic re-openings and renewed growth across the globe, but it seems highly unlikely capital markets returns can continue at this pace beyond the initial recovery.

Print PDF > One Year Ago, Would Anyone Have Predicted This?

 

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.