Services Tags: OCIO

Defined Contribution Plans: A Look at the Past, Present & Future

In this paper, we will highlight some key themes, namely that along with the growth of DC plans, the Pension Protection Act of 2006 (“PPA”) has been a catalyst for changes to plan design and investment structure. Additionally, the mainstream acceptance of behavioral finance has placed greater emphasis on simplifying the investment lineup and helping DC participants make more effective choices.

The percentage of U.S. workers that are covered by a traditional defined benefit (DB) pension has declined in recent decades while over the same period, defined contribution (DC) plans have become the most commonly used employer-sponsored retirement savings vehicle in the U.S.

As a growing percentage of the U.S. labor force will rely on DC plans as a key source of retirement income, we expect to see the continued evolution of best practices around the design, monitoring, and accessibility of defined contribution plans, including increased direction from regulatory organizations such as the Department of Labor (DOL).

In this paper we will highlight some key themes, namely that along with the growth of DC plans, the Pension Protection Act of 2006 (“PPA”) has been a catalyst for changes to plan design and investment structure. Additionally, the mainstream acceptance of behavioral finance has placed greater emphasis on simplifying the investment lineup and helping DC participants make more effective choices.

While these three factors have driven much needed change in the DC world, plan sponsors and consultants must continue to build on the solid foundation and tailwinds that the growing popularity of DC plans, PPA, and behavioral finance have helped create. In building on this strong foundation, DC plan sponsors should adopt a robust governance and monitoring framework in which the depth and quality of the investment lineup is equally important as the maximization of participant engagement, plan design, and oversight of all vendors responsible for providing third-party services to DC plans.

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Portfolio Strategies for a Rising Interest Rate Environment

2014 Marquette Investment Symposium session

In this presentation from our 2014 Investment Symposium, we explore current interest rate levels, our perspective as consultants, and strategic solutions for mitigating the effects of rising rates on portfolios.

Recorded Friday, September 12, 2014
2014 Marquette Investment Symposium

Please contact us for access to this video.

Fixed Income, (Eventually) Rising Rates and the (Non) Universal Law of “Bond Gravity”

In describing some of the strategies and portfolio frameworks that investors could consider for the management of their duration, liquidity, and credit exposures in anticipation of rising rates, we will address the potential benefits and also highlight some likely risks that should not be overlooked.

While we cannot predict exactly when and by how much rates will rise, the Federal Reserve (“Fed”) has recently signaled that we could see a modest increase in the fed funds rate by mid-2015. Given the increased possibility of rates rising over the next few years, investors should not retreat in fear from bonds en masse or look to underweight their fixed income allocations to anemic levels. Instead, they should continue to view fixed income as strategically important: after all, fixed income is a broad asset class with a diverse opportunity set. And, while we will summarize our views on some different sub-asset classes in this paper (including floating rate bonds, non-U.S. debt and convertibles), for additional reading on non-core fixed income sub-asset classes, please refer to our previously released papers on global fixed income, emerging markets debt, high yield, and senior secured loans.

In respecting the broadness of our client base, we seek to avoid a one-size-fits-all narrative on how they could look to manage their bond allocations: some clients will be limited in their ability to access certain sub-asset classes while others will have ample room and resources to maneuver across the choice spectrum. Consequently, there are a number of prudent approaches and strategies for these different types of investors to explore as a means of hedging their interest rate risk. The key is establishing which portfolio framework or sub-asset class exposure is the best fit for their programs and in line with their circumstances, risk tolerances, and investment goals.

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High Yield, Bank Loans, and Non-Agency RMBS for 2014-2015

The following paper analyzes current valuation levels as well as future return prospects over the next few years for High Yield, Bank Loans and Non-Agency RMBS.

Given the ongoing low interest rate environment, fixed income investors continue their unprecedented quests for yield. With the persistent slow growth in the U.S., necessary monetary easing in Europe and Japan, and the sustained slowdown in China, U.S. rates that were previously expected to rise moderately in 2014 and 2015 are now projected to rise at a much slower pace, if not remain range-bound. As a result, we expect continued strong interest in the fixed income sectors that have offered the most appealing yields and returns over the last five years: high yield, bank loans, and non-agency residential mortgage backed securities. The following paper analyzes current valuation levels as well as future return prospects over the next few years.

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Emerging Market Debt

This paper explores EMD as an asset class, focusing on the benefits and risks. Further, EMD characteristics and their impact on portfolio dynamics are discussed. Recommendations as well as guidance toward making an allocation to the asset class are included.

Due to risks, uncertainty, and overall lack of credit quality, institutional investors have not historically included emerging market debt (“EMD”) in their portfolios. However, the investment landscaped has changed over the past few years. Driven by low interest rates and deteriorating fundamentals in the United States and other developed countries, investors’ interest in EMD has skyrocketed in recent years.

This paper explores EMD as an asset class, focusing on the benefits and risks. Further, EMD characteristics and their impact on portfolio dynamics are discussed. Recommendations, as well as guidance toward making an allocation to the asset class, are included.

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3Q 2013 Market Briefing

A briefing on our 3Q 2013 Market Environment report, covering the overall U.S. economy, fixed income, U.S./non-U.S. equity, hedge funds, private equity, real estate and infrastructure.

Live Webinar – Friday, October 25, 2013 – 1:00-1:45 PM CT

Please join Marquette’s asset class analysts for a live webinar briefing on our 3Q 2013 Market Environment report. This webinar series is designed to brief clients on the market as soon as possible after quarterly market data becomes available.

The overall U.S. economy will be discussed, along with fixed income, U.S./non-U.S. equity, hedge funds, private equity, real estate and infrastructure.

Live webinar attendees will be able to submit questions to the presenters and vote in audience polls during the event. Questions will be answered as time allows during the Q&A session towards the end of the webinar.

If you are unable to attend the webinar live, you can also view it afterward on demand. Registrants will automatically receive a follow-up email shortly after the end of the webinar to notify them of webinar recording availability.

Please contact us for access to this video.

Emerging Trends in Alternative Asset Classes

2013 Marquette Investment Symposium session

In this presentation from our 2013 Investment Symposium, we explore various emerging trends in the alternatives space, including low volatility equity, tail risk, managed futures, gold, MLPs, GTAA, risk parity, farmland, direct lending, and opportunistic credit.

Investment Symposium 2013
Recorded September 13, 2013

Please contact us for access to this video.

Stress Test and Spending Policies for Endowments & Foundations

2013 Marquette Investment Symposium session

In this presentation from our 2013 Investment Symposium, we analyze different spending policy options for non-profit institutions, examine the long- and short-term effects of various spending policy decisions, and explore how stress testing can aid in understanding the risks of different spending policies.

Investment Symposium 2013
September 13, 2013

Please contact us for access to this video.

Investment Manager Search 2013: Fiduciary Duty Deep Dive

Live webinar on the investment manager search fiduciary duties of high alpha, high integrity and low fees. An update of our popular manager search webinar in 2011, we’ll dive even deeper into the details of a five-step best practice process with traditional and alternative manager case studies. 

Thorough manager due diligence and fee negotiation are critical to avoiding poor products and performance erosion.

Register now to join us for a live webinar on the investment manager search fiduciary duties of high alpha, high integrity and low fees. An update of our popular manager search webinar in 2011, we’ll dive even deeper into the details of a five-step best practice process with traditional and alternative manager case studies. Clear guidance for both clients and managers will also be covered, including “do’s and don’ts” for approaching our research process.

 

Live Webinar – Tuesday, June 18, 2013 – 1:00-1:45 PM CT

Please contact us for access to this video.

In Search of Opportunity for Active U.S. Equity Managers

This paper seeks to determine if there are areas of public equity markets that are “less efficient” and thus potentially conducive to active investing. Without taking a stance on the active versus passive debate, this paper asks, “if you plan to hire an active manager, what is the best place to start looking?”

As we highlighted in a recent newsletter (Passive Strategies Gaining in Popularity), institutional investors continue to shift their U.S. equity allocations away from actively managed strategies and into index funds. The support for this shift has been proven by academic research as well as recent investment experience. This paper does not question the validity of passive investing approaches. Accepting that it is difficult at best to beat a market that is relatively efficient, this paper nonetheless seeks to determine if there are areas of public equity markets that are “less efficient” and thus potentially conducive to active investing. Without taking a stance on the active versus passive debate, this paper asks, “if you plan to hire an active manager, what is the best place to start looking?” The following paper is broken up into multiple sections. First, the workhorse of active equity manager evaluation, Fama-French factor analysis, is introduced. Next, active managers with different size and style biases are examined to search for pockets of alpha. Finally, additional thoughts and conclusions are provided for investors.

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