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The Latest Key Developments in the Healthcare Industry

Health systems today face significant challenges, further complicating an ever-changing landscape. Some of the most notable trends we see in the space include:

  • Higher interest rates, which impact borrowing costs as well as investment opportunities;
  • Efforts to gradually repeal the Affordable Care Act (“ACA”);
  • The emergence of value-based payment programs;
  • The advent of major vertical integrations such as CVS-Aetna;
  • A growing demand for digital healthcare

The following article summarizes these key issues for health systems and where appropriate, provides some potential solutions.

Read > The Latest Key Developments in the Healthcare Industry

With over 20 years of healthcare investment consulting experience, Marquette serves healthcare clients across a broad range of operating cultures — including health systems, stand-alone hospitals, and specialty organizations — and with a variety of focus areas — including operating funds, retirement planning, insurance, endowments, and foundations. For more Marquette coverage of the healthcare industry, please see our previous newsletter Healthcare Organizations’ Top 3 Investment Concerns for Balance Sheet Assets.

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.

2018 Investment Symposium Briefing

Our 2018 Investment Symposium speakers summarize their presentations — from CEO Brian Wrubel’s opening remarks to the keynotes and flash talks.

The symposium covered the current market environment, emerging investment themes and investment stewardship challenges in the year ahead. The event featured six flash talks designed by our research team to brief clients on relevant topics and encourage timely conversations with investment consultants.

All keynote and flash talk videos are now available on demand:

 

An October to Forget?

Stock markets around the globe “corrected” in October, experiencing a sudden and broad-based drop. The sell-off was somewhat unusual as there was no glaring fundamental event that triggered the market drop, but rather a confluence of events that all seemed to come to the forefront of investors’ minds simultaneously. These concerns, coming on the heels of a strong third quarter for stocks that left the market looking modestly overvalued, led to an unpleasant month of returns.

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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.

Real Estate Position Paper – 2018 Update

This real estate position paper seeks to establish a fundamental understanding of the asset class. More specifically, the various styles, benefits, risks, mechanics, and benchmarks relevant to commercial real estate investments are examined, with an emphasis on quantitative and qualitative illustrations. Recommendations and guidance towards the investment manager search process and making an allocation to the asset class are also included.

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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.

Emerging Markets Equity — Reason for Concern?

After a strong 2017, emerging markets (“EM”) equities have struggled to keep pace with their U.S. counterparts in 2018. Year-to-date through August 31, 2018, the MSCI Emerging Markets equity index has underperformed the S&P 500 by 17.1%. EM equities gave up an 8.3% gain in January with a streak of weakness from February through August.

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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.

Infrastructure Position Paper – 2018 Update

Infrastructure is a relatively new asset class to institutional investors and over the last twelve years has emerged as a sustainable addition to client portfolios. The following paper examines the asset class in great detail, from its early beginnings in the 1980s to its current day role in an institutional portfolio. In particular, the nuances of infrastructure — as well as its unique characteristics — are discussed in an effort to cultivate a thorough understanding of the asset class. Recommendations and guidance towards the manager search process and making an allocation to the asset class are also included.

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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 Value’s Turn?

This week we examine factor performance from the Russell 1000, with a focus on the dynamic between growth and value stocks. For the month of July, value finally pulled ahead of growth as a contributor to performance. This is a shift from recent behavior as growth leads on a trailing 7-year basis. Typically, growth and value have operated in a cyclical relationship so value’s shift from detractor in 2Q to a positive contributor in July could signal a reversal in relative performance between the two styles.

Financials, particularly banks, did well in July by posting strong earnings; these tend to be value stocks and contributed to the relative outperformance. While tech has been a very strong performer year to date, some of the FANG stocks, namely Facebook and Netflix, hit potholes in July. Facebook encountered more trust and brand issues surrounding privacy and Netflix battled disappointing subscriber growth. These specific company pullbacks likely hurt the growth factor.

Growth has outperformed value since 2011 and the rolling 10-year outperformance is at a high point, now bumping up against two standard deviations from its long-term average. This paired with value’s recent edge above growth may indicate that growth’s outperformance versus value could be coming to an end.

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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.

Socially-Responsible Fixed Income Investing

Socially-responsible investing (SRI) is one of the fastest-developing segments of investing and we see a ballooning trend of true action taken by investors. Specifically for fixed income, socially-responsible investing is growing and a great deal is evolving in the recent landscape, particularly in terms of philosophical changes as well as the development of new products where “the rubber meets the road.”

This white paper explores trends in socially-responsible fixed income investing and assesses the challenges. In addition, we examine the prevalence of Environmental, Social, Governance (ESG) issues and compare their uses in fixed income versus equities. Finally, we evaluate methods to invest in fixed income for the responsibly-minded investor.

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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 are Volatility Risk Premium Strategies?

Volatility Risk Premium (“VRP”) strategies — also known as defensive equity strategies — are relatively new to the institutional landscape, but have grown in popularity given the current backdrop of historically high equity valuations, low interest rates, and frustration over hedge fund fees and performance. This newsletter summarizes how these strategies operate and outlines key risk and return metrics that will help investors decide if a VRP strategy is appropriate for their portfolios.

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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.

Value Underperformance in the Current Market Cycle

With the value premium seemingly in decline, value investors have had a lot to complain about over the past ten years. Growth stocks continue to soar despite rich valuations and increasingly lofty expectations. However, we are most likely closer to the end than the beginning of this “pro-growth” trend.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice nor 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.