Services Tags: OCIO

Low Volatility: Factor or Fad?

The beginning of 2022 represented a change of pace for equity investors, as increased geopolitical and macroeconomic uncertainty drove the S&P 500 to its first negative quarter in two years. In light of recent performance trends and the potential for continued asset price fluctuation, market participants may be interested in assessing the viability of strategies with lower risk profiles that still offer the potential for long-term gains similar to those of the S&P 500. One such strategy is low volatility equity investing. Though it has fallen somewhat out of favor in recent years, low volatility is a generally accepted risk premia factor (akin to value, size, quality, etc.), meaning investors can theoretically expect to earn excess returns by allocating to lower volatility equities over the long run. This newsletter seeks to understand the rationale and evidence for this premium, explain recent performance of low volatility stocks, and examine the prospects of the style going forward.

Read > Low Volatility: Factor or Fad?

 

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 Speaking at OCIO Central Summit 3/23

On Wednesday, March 23rd,  Marquette will be speaking at the OCIO Central Summit hosted by Portfolio Summits in Chicago.

Derek Schmidt, CFA, CAIA, will be joining a panel entitled, “Focus on Alternative Investments,” covering how alternatives strategies have shifted with the debt-fueled expansion of the market. Panelists will discuss alternative investment strategies in PE, venture capital, buyouts, hedge funds, commodities, derivatives, and real estate, and consider updated regulatory issues post pandemic.

The OCIO Central Summit brings together 150+ Outsourced Chief Investment Officers (OCIOs) and institutional consultants based across Illinois and the surrounding states for a day of panel discussions, presentations, Q&A, and networking. For more information, visit the Portfolio Summits event webpage.

Nat Kellogg Speaking at OCIO Central Summit 3/23

On Wednesday, March 23rd, Nat Kellogg, CFA will be speaking at the OCIO Central Summit hosted by Portfolio Summits in Chicago.

Nat will be joining a session entitled, “Manager Selection Roundtable,” with several industry professionals. Panelists will discuss the challenging process of manager selection and what investors should consider when making decisions, including how to identify competitive advantages and how to evaluate which managers will best fit their institution’s needs.

The OCIO Central Summit brings together 150+ Outsourced Chief Investment Officers (OCIOs) and institutional consultants based across Illinois and the surrounding states for a day of panel discussions, presentations, Q&A, and networking. For more information, visit the Portfolio Summits event webpage.

OCIO Momentum Continues

One of the most significant evolutions in our business over the last decade has been the growth of our Outsourced Chief Investment Officer (“OCIO”) services platform. What at first seemed like chance requests over a decade ago from a handful of clients looking for additional help managing their portfolios has become increasingly mainstream. More than half of our prospective client engagements last year inquired about OCIO services. Our experience is certainly reflective of a broader industry trend as OCIO assets under management have grown from $90 billion to an estimated $2.7 trillion over the last fifteen years.¹ Given the industry growth and increased interest in OCIO services from our client base, we thought we’d share our experience as to why institutions are asking about OCIO and what the major challenges are that Marquette has helped these clients solve.

Read > OCIO Momentum Continues

 

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.

Life During Wartime: Assessing the Market Impact of the Russia/Ukraine Conflict

Recent days have seen an escalation of political tensions in Eastern Europe, and on February 24th, Russian forces began conducting large-scale military operations in Ukraine. These actions have drawn widespread condemnation from the international community, with NATO repositioning troops along its eastern flank and both the United States and European Union announcing intentions to impose sanctions on a variety of Russian financial institutions. The conflict has also threatened the stability of global markets, particularly those areas of the world economy that are most sensitive to energy and the performance of emerging market countries. The aim of this newsletter is to assess the ramifications of Russian actions vis-à-vis the broad market and determine the potential implications of further escalation of the conflict going forward, including:

  • Equity index performance
  • Index exposure to Russia and Ukraine
  • Commodity market expectations
  • Central bank policy and inflation impacts
  • Historical impact of similar exogenous shocks on equities

Read > Life During Wartime: Assessing the Market Impact of the Russia/Ukraine Conflict

 

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.

In Context Video: Is the 60/40 Portfolio Dead Forever?

In this video, the authors of our recent white paper discuss the 60/40 model portfolio — a long-time approach to portfolio construction that generally consists of a 60% allocation to equities and a 40% allocation to fixed income. From the decades of success the 60/40 portfolio has experienced (and why) to skepticism about its future viability in light of the current low interest rate and expensive equity market environment and how organizations may still be able to meet their return targets, we seek to answer if the 60/40 portfolio’s efficiency is a thing of the past.

Marquette’s In Context series brings our latest research to your screen, with discussion led by the authors behind Marquette’s papers and newsletters. From current events and trends to portfolio strategy and the broader economic landscape, we explore the questions investors are asking with consideration and the context you need to know.

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.

 

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 is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Marquette including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request.

Certainty Over Uncertainty: Biden Nominates Powell for Another Term as Fed Chair

In a move especially pivotal given today’s elevated inflation as the economy is resuscitated out of the pandemic, President Joe Biden announced yesterday morning (November 22nd) that he would nominate the incumbent Jerome Powell for another term as Chair of the Federal Reserve. Additionally, Biden nominated Lael Brainard as Vice Chair. Both Powell and Brainard had been under consideration for the Chair role in uncharacteristically lengthy deliberations on the part of Biden, who had interviewed both for the position on November 4th.

This newsletter provides background on Powell and Brainard, covers the market reaction to Biden’s announcement, and analyzes expectations for interest rates and inflation in the coming years.

Read > Certainty Over Uncertainty: Biden Nominates Powell for Another Term as Fed Chair

 

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.

Holiday Supply Chain Woes Linger

Headlines continue to buzz with worries of supply network dysfunction that seem to span every link of the chain, from truckers and shippers to commodities and semi-conductors. Clearly, the delicate balance of supply and demand is off kilter. Supply chain disruptions began when global economies locked down amid the outbreak of COVID-19, and the problem has only been exacerbated by stop-and-start re-openings that have taken place in recent months.

This newsletter seeks to understand current supply chain dynamics and what they might mean for investors and consumers alike as we move into the holiday season. We cover the three-prong problem of prices, transport, and labor, which market participants will likely feel the squeeze tighter than others, how companies have continued to grow their margins, inflation considerations, and what to expect in the short and long term.

Read > Holiday Supply Chain Woes Linger

 

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 the 60/40 Portfolio Dead Forever?

Model portfolios — or those which adhere to a specific set of guidelines surrounding asset allocation and rebalancing — are often utilized by investors because of their rules-based nature, which eliminates the need for constant monitoring. One such model is the “60/40 portfolio,” which consists of a 60% allocation to diversified equities and a 40% allocation to a broad basket of fixed income securities. Due to the imperfect correlation between stock and bond returns, the 60/40 model has enjoyed decades of success at both providing its users with strong absolute returns and suitable protection during market drawdowns. Additionally, there is an intuitive attraction of the 60/40 portfolio due to its relative simplicity of holding just stocks and bonds as its underlying investments. That said, skepticism abounds regarding the model’s viability going forward in light of the current interest rate environment and low forecasted equity returns, particularly for those investors like endowments and foundations with specified spending requirements.

The aim of this paper is to assess the effectiveness of the 60/40 model going forward and provide guidance to investors whose spending targets require an expected return that is consistent with the historical performance of 60/40 portfolios, which has typically hovered around 8%.

Read > Is the 60/40 Portfolio Dead Forever?

 

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.

Q3 2021 Market Insights Video

This video features an in-depth analysis of the third quarter’s performance by Marquette’s research team, reviewing general themes from the quarter and risks and opportunities to monitor through the end of the year. 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.