OCIO Archives — Page 12 of 23 — Marquette Associates

Second Quarter Review of Asset Allocation: Risks and Opportunities

The second quarter of 2020 proved to be as eventful as the first, with slow economic results being largely ignored as markets rallied. GDP growth for the quarter is expected to come in at -35.5% YoY, though 3Q GDP projections indicate a significant rebound is expected as the country begins to reopen to “the new normal.” In addition, the unemployment rate came in at 11.1%, down from the April peak above 14%. Below are some highlights from the quarter:

Countries around the globe began reopening businesses amid fears of a second wave of COVID-19 infections.
Daily infections reached a new high in the United States at more than 50,000 per day, causing some states to roll back their reopening plans.
Weekly initial claims for unemployment insurance have continued to trend downwards.
Additional fiscal and monetary stimulus are expected in the second half of the year, bolstering markets.

COVID-19 has proven to be a potentially long-lasting concern as it remains to be seen whether we are in for a V-shaped or U-shaped recovery. Economic data is improving slowly, though markets have seemed to shrug off some of the negative news as the S&P 500 moved into positive territory over the one-year period. Though it may have fallen into the background due to COVID-19, 2020 is a presidential election year. Uncertainty surrounding the election will undoubtedly have an impact on forward-looking expectations. In this newsletter, we analyze what all of this means for each asset class.

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.

Financial Factors in Selecting Plan Investments Proposed Rule

On June 23rd, 2020, the U.S. Department of Labor released a proposal to amend certain fiduciary regulation around the consideration of economically targeted investments, or those that incorporate environmental, social, and governance factors.

The purpose of this legislative update is to provide some background on ESG integration and the subsequent DOL guidance on these issues as well as a summary of the Proposed Rule and its impact on ERISA plans.

Read > Financial Factors in Selecting Plan Investments Legislative Update

For additional Marquette coverage on sustainable investing, reference our recent newsletter, Sustainable Investing in a Post-COVID World, and white paper, The Future of Investing: Sustainability and ESG Integration.

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.

Don’t Mind the Gap

On the surface it looks disjointed. We are in the midst of what is likely the worst recession since the Great Depression, but the stock market has rallied back in a matter of weeks and currently sits just 10% off all-time highs. Treasury yields appear to be pricing in an extended period of softness, and high yield spreads have only started to show signs of recovery. While the future is always an unknown, it feels as if we are facing a new level of uncertainty with many more moving parts.

In this newsletter, we explore equity market dynamics to help reconcile the apparent gap between the recent good news from equity markets and overwhelmingly negative news from the economy and bond markets.

Read > Don’t Mind the Gap

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.

Brighter Lights at the End of a Shorter Tunnel

Biotech company Moderna’s announcement earlier this week that its coronavirus vaccine successfully helped healthy adults produce antibodies against COVID-19 sent the S&P 500 up 3% and the 10-year Treasury yield rebounding from 0.64% to 0.73% on Monday. In this pandemic, the last week of March marked a pivotal turning point when investors started seeing some light at the end of the tunnel. That week was when new infections and hospitalizations started peaking and declining in Italy and Japan, soon to be joined by New York and Washington state. That week also coincided with the Federal Reserve’s and U.S. Treasury’s — later followed by Congress’s — announcement of their substantial stimulus. Credit spreads have gradually been tightening ever since as stimulus ramped up, a number of vaccines and treatments reached Phase I and Phase II clinical trial milestones, and more recently, various states have started to reopen. Moderna’s favorable results added fuel to this positive sentiment and the market’s upswing.

In this newsletter, we examine the evolution of credit spreads and yields in 2020 to gauge the attractiveness of holding investment grade and sub-investment grade credit. Vaccine development is central to assessing the markets today as it is the ultimate permanent solution, and we detail the prospects of various vaccine candidates as well as discuss how investors should allocate to credit in light of vaccine progress in conjunction with key market metrics. Although the vaccine is a permanent solution, fiscal and monetary stimulus have proven to be critical for mitigating damage to the economy and markets in the interim and are still integral to assessing the markets today. We take a closer look at these lifelines from the U.S. government in an attempt to answer the all-important question: how much runway is there with this stimulus? The hope is that current programs coupled with any future policies will be sufficient to sustain and ultimately revive the economy until a vaccine allows for complete resumption of economic activity. Lastly, we dive into the fallen angels (bonds downgraded from investment grade to sub-investment grade), defaults, and bankruptcies that are threatening the credit markets right now and how to address these as investors. Throughout this discussion, we highlight three perspectives that are critical to measuring the attractiveness of an investment or an asset class: valuations, technical factors, and fundamentals.

Read > Brighter Lights at the End of a Shorter Tunnel

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 It Game Over for Value Stocks?

Over the last ten years, growth stocks have outperformed value stocks by an average 5.3% per year, and the differential is even greater for shorter time periods. As this differential widened in recent years, the expectation was that value stocks would provide greater protection in a market downturn as the market should theoretically place a greater emphasis on quality and stability, attributes typically found in value stocks. However, as the market rapidly fell into bear market territory in February and has whipsawed back and forth since doing so, growth stocks have continued to outperform value stocks, a trend which has been surprising to investors. At this point, those who have maintained a value bias in their portfolios are undoubtedly frustrated as the paradigm has failed to play out through this market correction and has likely left market participants debating the merits of value stocks altogether.

To help answer these questions, we have enlisted two of our senior research analysts, Samantha Grant (“SG”) and Jessica Noviskis (“JN”), to discuss the value vs. growth dynamics we have seen over the last decade, and to assess the future performance outlooks for each over the next market cycle. In the following conversation, Jessica covers the topics from a growth perspective while Samantha tackles the questions from the value side. Collectively, their answers should help investors decide if it is finally time to abandon value stocks, or if this is just another long-dated cycle in the equity market.

Read > Is It Game Over for Value Stocks?

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 Associates Continues to Expand Wealth Consulting Capabilities

CHICAGO, IL, February 13, 2019 – Marquette Associates, Inc. today announced plans to expand its wealth consulting offerings with an ownership interest in Milwaukee-based investment adviser, Operose Advisors LLC.

“Providing a high net worth solution built upon our institutional approach has been a key focus of our long-term strategy over the last number of years,” said Brian Wrubel, President & CEO of Marquette. “Operose shares our culture of client service and our investment philosophy. This partnership creates an integrated solution for private clients with assets ranging between $1-25 million and small market investment advisory opportunities.”

Operose Advisors provides investment advisory and wealth management services to individuals, families, trusts, and closely-held businesses. By partnering with Operose, Marquette will establish its fifth office and continue to expand its presence in Wisconsin. Managing Partner Nicholas Bauer, CFA, leads Operose Advisors and has 20 years of investment experience. He and his team in Milwaukee will ensure continuity of service, while leveraging Marquette’s institutional model and benefiting from added resources.

Marquette also welcomed Aimee O’Connor, CFP® as a senior vice president in January to continue expanding the firm’s ultra-high net worth/family office capabilities based in Chicago. As a senior investment consultant, Aimee is involved in the daily management and administration of Marquette’s private client relationships. She has 14 years of investment experience including work as an independent consultant working with RIAs, family offices, and high net worth individuals. Previously, she was the co-director of consulting and senior consultant at DiMeo Schneider & Associates.

“We are excited at the opportunity to add Aimee to our team. Her considerable background working with private clients is a great fit as we steadily grow this part of our business,” said Wrubel. “The partnership with Operose, and the addition of Aimee, uniquely positions Marquette to offer a cost-effective, institutional approach for private families of all sizes.”

About Operose Advisors
Operose Advisors LLC is an investment adviser registered with the State of Wisconsin. We are dedicated to growing the wealth, knowledge and professional networks of the clients we serve by employing an institutional approach to wealth management.

About Marquette Associates
Marquette Associates is a Chicago-based, independent investment consulting firm that guides institutional investment programs with a focused client service approach and careful research. Marquette has served a single mission since 1986 – enable institutions to be more effective investment stewards. Marquette places client fiduciary duties first through complete independence and 100% employee ownership. The firm currently serves more than 385 clients with over $182 billion in assets – from public funds, unions and corporations to endowments, foundations and other non-profits. For more information, please visit www.marquetteassociates.com.

Contact:
Brian M. Wrubel, 312.527.5500
bwrubel@marquetteassociates.com

Print Update

Marquette Associates Ownership Update

CHICAGO, IL, February 8, 2019 – Marquette Associates, Inc. today announced an update to the firm’s succession plan in a continuing effort to strengthen the firm’s stability and ongoing growth. The three largest shareholders will sell 30% of their ownership to the existing shareholder base. The current leadership at Marquette will remain in place – there are no planned retirements and the firm will remain under the leadership of President & CEO Brian Wrubel for the foreseeable future.

“Marquette has always been defined by our people, our client service and our independence. We have a talented group of investment professionals that are assuming more active leadership responsibilities and as an employee-owned firm, we are accountable to our clients and to each other and have worked since our founding in 1986 to grow the firm responsibly and with our clients’ interests at the forefront,” said Wrubel. “This restructuring acknowledges our commitment to Marquette’s next generation of leaders and is an important step for Marquette in continuing to broaden and diversify the firm’s ownership base.”

With the ambiguity that has become common within the investment consulting industry surrounding consolidation and outside capital, Marquette remains committed to independent ownership and transparency for its clients. The firm strongly believes that the talent, discipline, and care demonstrated by its managing partners will secure its position as one of the leading employee-owned investment consulting firms for years to come.

Contact:
Brian M. Wrubel, 312.527.5500
bwrubel@marquetteassociates.com

Print Update

Marquette’s Ongoing Commitment to Building a Diverse Team and Industry Leaders

With each passing year, we continue to see compelling and thoughtful empirical research that highlights the strong case for all companies to embrace a more diverse and inclusive workforce. Brian Wrubel, President & CEO, addresses Marquette Associates ongoing commitment to building a diverse team.

Read the full letter here.

Jeremy Zirin Speaking at NAREIM Capital Raising & Investor Relations Meeting 12/5

On Wednesday, December 5, Jeremy Zirin, CAIA will be speaking at the 2018 National Association of Real Estate Investment Manager’s (NAREIM) Capital Raising & Investor Relations Meeting in Chicago, Illinois.

As a senior research analyst in real estate, Jeremy will be participating in an interactive discussion regarding the challenges facing institutional investors as they deploy allocations and construct portfolios in the commercial real estate market. The discussion seeks to illustrate the panelists’ outlook for the real estate asset class and how each responds to the need to diversify investor bases.

For more information, please visit the event page.

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