Services Tags: OCIO

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.

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

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.

Commodities: Cycle or Cyclical?

A commodities supercycle is generally defined as a sustained period of broad-based above-trend movement. In the first quarter of 2020, almost a decade of commodities price weakness was capped off with a more than 20% drop, and since then, prices have rebounded more than 40% to levels last seen in 2018, inspiring headlines debating whether this is the start of the next supercycle. Proponents argue reopening demand, a potential uptick in global growth and inflation, and a weaker U.S. dollar, among other factors, point to yes. Skeptics contend that an initial demand normalization complicated by temporary supply disruptions does not a supercycle make, at least yet. Commodity price movements can be especially volatile given lumpy physical market characteristics. Oil prices moving into sharply negative territory last April demonstrate exactly that. Whether this latest move is cyclical and temporary or structural and sustainable is still to be determined.

In this newsletter, we explore a few of the key factors that could support or suppress a sustained commodities bull market.

Read > Commodities: Cycle or Cyclical?

 

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.

What Does the Latest Stimulus Mean for the Economy and Fixed Income Markets?

President Joe Biden signed the $1.9 trillion pandemic relief package yesterday amidst rising inflation and interest rates since the beginning of the year as the markets price in future growth. With Fed Chair Jerome Powell’s recent reaffirmation of the central bank’s accommodative monetary stimulus, continued vaccine rollout, a drop in COVID-19 cases and deaths, and Biden’s statement that the U.S. will have enough vaccines for every adult by the end of May, a key question on many investors’ minds is, “How much more inflation and rising interest rates could we expect in the road ahead?” This edition of Marquette Perspectives will attempt to answer that question by examining this relief aid in connection with vaccination progress and the economic recovery.

Read > What Does the Latest Stimulus Mean for the Economy and Fixed Income Markets?

 

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.

Fear is the Return-Killer

Frank Herbert’s science fiction novel Dune contains a litany which states that “fear is the mind-killer.” Indeed, anxieties brought on by periods of turmoil can cause individuals to forsake rational thinking and act impulsively, usually to their own detriment. This phenomenon often manifests itself in equity markets, particularly when investors choose to curtail or altogether abandon equity allocations amid (or in expectation of) steep declines in the prices of risky assets. These impetuous actions stem from various emotional biases held by market participants including loss-aversion, which describes the asymmetrical response many individuals feel with respect to gains and losses (i.e., investors derive more pain from a loss than pleasure from a gain of equal value).

The aim of this newsletter is to demonstrate that, save for a modicum of intangible psychological comfort, sales of risky assets motivated by fear and panic provide investors no value, and can ultimately have disastrous impacts on the long-term returns of a portfolio.

Read > Fear is the Return-Killer

 

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.

Small-Cap: Much Ado About Quality

2020 was a year in which some small-cap asset managers flourished while most struggled to adapt to the changing tides of an unprecedented global pandemic. Active managers will not soon forget the difficulty of investing in 2020, but the dynamics that predicated the market may go overlooked.

In this newsletter, we seek to address the underperformance of small-cap active managers over the last several years, focusing on factor fallout and the definition of quality. We will specifically look to address how the rise of thematic versus fundamental investing came to the forefront in 2020.

Read > Small-Cap: Much Ado About Quality

 

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.

Hedging Rising Inflation and Interest Rates

Rising inflation and interest rates have not been real issues for investors for several years, but both have remained popular topics of concern. While inflation does not appear to be an immediate risk given still depressed GDP and elevated unemployment, the size of the latest proposed $1.9 trillion COVID relief package has many thinking about future implications. Stimulus did not lead to inflation following the Global Financial Crisis, but there are a number of reasons, beyond the sheer size of this effort, that we could see greater inflationary pressures this time: more pent-up consumer demand, well-capitalized banks and healthy consumer balance sheets, de-globalization, and higher operational costs associated with the virus. And while the Federal Reserve has committed to maintaining its ultra-accommodative monetary policy until long-term inflation hits 2% (with shorter-term inflation allowed to rise moderately above 2% for some time), unless the Fed changes its stance on negative rates, rates can only go in one direction from here: up.

Like all things market-related, we do not recommend trying to time inflation or interest rates. In this newsletter, we analyze equity long/short hedge funds as an option for investors to potentially optimize their portfolio for this dynamic environment.

Read > Hedging Rising Inflation and Interest Rates

 

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.

Prospects of Dollar Depreciation in the COVID Recovery & Impact on Asset Classes

As vaccine distribution continues in full force and the global economy’s recovery from the COVID pandemic gains momentum, investors are concerned about depreciation of the U.S. dollar and how this phenomenon might affect various asset classes within a portfolio.

In this paper, we examine the mechanics of dollar depreciation and its subsequent impact on traditional asset classes. We begin by exploring the macroeconomic factors that drive dollar strength or weakness and then examine the impact of dollar depreciation on the fixed income, U.S. equities, and non-U.S. equities asset classes both by covering the potential effects of a stronger or weaker dollar and by assessing historical performance.

Read > Prospects of Dollar Depreciation in the COVID Recovery & Impact on Asset Classes

 

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.

 

Fundamental Disconnect: Understanding the Nature and Impact of Recent Frenzied Trading

In recent years, most major brokerage firms have participated in a “race to the bottom” with respect to commissions on equity purchases and sales, as well as options trades. This phenomenon, in tandem with the rise in popularity of app-based trading platforms like Robinhood, has afforded retail investors greater access to capital markets. While the democratization of the investment world is beneficial in many respects, it can also lead to irrational behavior and a decoupling of asset prices and fundamentals.

In this newsletter, we analyze the recent frenzied trading activity that has grabbed the headlines, including a summary of what has happened so far and a look at the impact and implications of this behavior.

Read > Fundamental Disconnect: Understanding the Nature and Impact of Recent Frenzied Trading

 

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.