Portfolio Management

  1. A case for high yield in a rising rate environment

    trueLast year, the fixed-income markets saw considerable volatility as participants debated whether quantitative easing was about to end — this was answered in December as the Fed began its tapering program. At the time of writing, U.S. growth dynamics remain favorable and with greater visibility on ...

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  2. Choosing among derisking strategies is no easy task

    trueAlthough the full details of last year's landmark pension buyout deals remain largely undisclosed, one fact is abundantly clear — many plan sponsors of all shapes and sizes are eager to decide for themselves whether annuitization is the right solution for managing pension risk.

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  3. The case for emerging markets revisited

    trueSince the beginning of May, global fixed-income markets have sold off aggressively. The 10-year Treasury yields have increased almost 100 basis points, triggered by concerns that an improving U.S. economy would cause the Fed to gradually raise interest rates. The immediate consequence of this shift ...

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  4. High-yield bonds and bank loans in today's environment

    trueMany institutional investors view their high-yield bond and leveraged loan allocations separately. We believe this is a sub-optimal practice. In separating these asset classes, the investor bears the responsibility to identify and evaluate what may be subtle risk/reward changes in each class and ...

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  5. Tracking the phenomenal growth of the ETF market

    trueOver the past 15 years, the number of institutional investors that reported using exchange-traded funds or exchange-traded products increased 2,086%, rising to 3,367 institutions located in 50 countries in 2012, from 154 in 14 countries in 1997.

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  6. International small cap a missed opportunity

    trueU.S. consultants and their clients increasingly have moved to embrace global mandates in their search for diversification and return in their equity portfolio. Many of these investors already have built and maintained a sizable position in international equities.

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  7. Multifactor tilts are best bet for performance boost

    trueInvestors have successfully employed style factor tilts for more than 40 years to improve on passive capitalization-weighted equity portfolios. Empirical studies of popular style tilts like value, small size and momentum repeatedly have been shown to outperform benchmarks across most global ...

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  8. Risk parity in a rising-rates regime

    trueRising interest rates are causing anxiety about risk-parity strategies that may carry leveraged bond positions.

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  9. Index-fund outperformance not logical in rational world

    trueIn a rational market for investment management, active investment should outperform passive investment. Still, much evidence suggests index funds have outperformed actively managed ones after fees and expenses. Any such outperformance is peculiar.

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  10. Careful attention needed when choosing target-date funds

    trueThe U.S. Department of Labor's Employee Benefits Security Administration guidance on selecting and monitoring target-date funds in 401(k) and similar participant-directed individual account plans recommends plan executives consider a “custom or non-proprietary” target-date fund as a potential ...

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  11. Hedged global bonds could be answer to DC volatility problem

    trueMany defined contribution plan sponsors are seeking solutions aimed at reducing undue volatility — excess volatility without a commensurate increase in return — that can prevent a plan and its participants from achieving their long-term objectives. Our research suggests hedged global bonds may be ...

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  12. Analysis shows prospects for fixed-income markets are not so rosy

    trueGenerally, history provides useful lessons for the future. For fixed-income markets, however, the recent history is downright misleading. To wit, let us compare the total performance of equities, as proxied by the S&P 500 Total Return index, and fixed-income markets, as measured by the Barclays ...

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  13. Public funds should take good look at liability matching

    trueTwo very good recent books about pension finance, “State and Local Pensions” by Alicia Munnell and “Pension Finance” by Barton Waring, touch on the many daunting challenges faced by public pension systems.

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  14. Currency volatility can be antidote for interest rate risk

    trueWorldwide, investors in fixed-income portfolios share a common concern — the risk of rising interest rates as global economies recover and central banks tighten monetary policy.

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