Topic Tags: Asset Allocation

Is Risk Parity Right for Your Portfolio?

February 2013 Investment Perspectives

Driven by volatile equity markets, falling interest rates, and heightened aversion to portfolio losses, interest in risk parity has skyrocketed over the last three years. Unfortunately, the risk parity investment thesis is not always understood by investment committees and trustees, which can contribute to sub-optimal portfolio decisions. In the following newsletter, we address the salient points of risk parity to help educate investors so they can determine if it is an appropriate allocation for their portfolios.

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Global Equity Position Paper

The following paper examines global equity as an asset class, focusing on justifications and concerns for investing globally rather than via a traditional partitioned U.S. and non-U.S. approach. Furthermore, relative performance, risks, and meaningful outperformance from active management are also considered. Ultimately, this paper strives to investigate the theoretical reasons for global investing and whether these same arguments hold true in reality.

As economies and capital markets become increasingly more integrated, interest in global equity investing has soared over the past few years, making some U.S. institutional investors question the traditional partitioned approach of U.S. and non-U.S. equity allocations. Over the last ten years, allocations to global equity mandates (as a percentage of new commitments to global and international funds) have risen from 6% in 2000 to almost 40% by 2011.1 In essence, U.S. investors have increased global equity mandates as a percentage of their total equity allocations, meaning a shift from a partitioned U.S., non-U.S. approach to a global program.

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The Fiscal Cliff

Late October 2012 Investment Perspectives

Ramifications for the Economy, Financial Markets, and Institutional Portfolios

With the Presidential election quickly approaching on November 6th there has been a lot of talk about the upcoming “fiscal cliff” that awaits the eventual winner. Due to the lack of bipartisan consensus in Washington over the last few years there are a host of tax increases and spending cuts set to hit the economy if no action is taken by policy makers.

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3Q 2012 Market Environment Briefing

A briefing on our 3Q 2012 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 12, 2012 – 1:00 PM CT

Please join Marquette’s asset class analysts for a live webinar briefing on our 3Q 2012 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.

Portfolio Rebalancing Guide

Failure to rebalance a portfolio can lead to a much different risk and return profile than suggested by the original asset allocation. Although straightforward in concept, the topic of rebalancing is not always understood, most especially its importance in times of market stress. In this paper, we address the most common rebalancing programs utilized by investors, and investigate the advantages of each.

Regularly rebalancing portfolios is one of the key duties of trustees and other fiduciaries responsible for managing institutional portfolios. Asset allocations are set to provide a predetermined risk/reward profile that fits a fund’s objectives and constraints. Portfolios are rebalanced when they drift away from policy target in order to maintain the risk/reward profile implicit in the original asset allocation. How often should clients rebalance their portfolios? What guidelines should clients use to determine when to rebalance? What are the costs and benefits associated with rebalancing? This paper takes a rigorous look at rebalancing, and provides some guidelines for implementing a rebalancing policy.

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Portfolio Rebalancing Policy: A Fiduciary Duty in Good Markets & Bad

Live webinar to discuss our upcoming paper on rebalancing and guidelines for implementing a rebalancing policy.

Portfolios must be rebalanced to maintain the risk/reward profile set in the original asset allocation. But how often should portfolios be rebalanced? And what guidelines should be used to determine when to rebalance? As institutional investment stewards, trustees and their investment consultants have a fiduciary duty to set a clear policy on portfolio rebalancing.

Register now to join us for a live webinar to discuss our upcoming paper on rebalancing [Ed: updated in 2018] and guidelines for implementing a rebalancing policy. We’ll address key questions to consider and discuss in more detail with your consultant.

 

Live Webinar – Wednesday, May 16, 2012 – 1:00-1:45 PM CT

Please contact us for access to this video.

 

Commodities Position Paper

Explores commodities as an investment, focusing on investment vehicles, the sources and attributes of historical risk and return, and commodities’ place in an investment portfolio.

Skyrocketing commodity prices combined with the poor performance of equities have led to an increased interest in commodity allocations. Commodities have not historically been part of an institutional investor’s asset allocation, and some even question whether commodities are an asset class.

This paper will explore commodities as an investment, focusing on investment vehicles, the sources and attributes of historical risk and return, and commodities’ place in an investment portfolio. Commodities as an investment are introduced and then the mechanics of long-only futures positions are explained. Next, the drivers of individual commodity returns and portfolios of commodity positions are examined. Finally, commodities are analyzed in the context of a balanced portfolio.

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2012 Market Preview

January 2012 Investment Perspectives

Reflecting back on 2011 does not elicit a lot of warm and fuzzy feelings.

News highlights include a downgrade to the U.S. credit rating, political gridlock in Washington D.C., ongoing sovereign debt issues in Europe, and a stubborn lack of economic growth. Predictably, these major news items took a toll on the capital markets, with U.S. equities mostly down for the year, and non-U.S. equities considerably worse off than their U.S. counterparts. Not surprisingly, the ongoing frustration (and dispersion) of equity markets pushed investors to the bond market, as rates – contrary to popular sentiment one year ago – fell yet again, thus making the year a profitable one for fixed income investors. Moving outside of the traditional capital markets, alternative asset classes had more of a mixed 2011: hedge funds again disappointed, while real estate and private equity continued their recoveries from the abyss known as 2008 – 2009.

But enough about 2011 – it is 2012 and investors are less concerned about what happened, and more interested in what the coming year holds for their portfolios. In the following articles, we will take a closer look at critical issues for each asset class in 2012. Each article contains insightful analysis and key themes to monitor over the coming year, themes which will underlie the actual performance of the asset classes covered. Articles are offered for the following asset classes: fixed income, U.S. equities, non-U.S. equities, hedge funds, real estate, private equity, and infrastructure. As a backdrop to the capital markets, we examine some crucial macroeconomic topics as they pertain to the U.S. economy.

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Infrastructure Position Paper

Examines the infrastructure asset class in great detail, from its early beginnings in the 1980s to its current day role in an institutional portfolio.

Infrastructure is a relatively new asset class to institutional investors and over the last five 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 as well as guidance towards making an allocation to the asset class are also included.

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Please see our 2018 Update to this Infrastructure position paper.