Member Educational Materials

 

Distributed Ledger Technology

May 2017
PwC Luxembourg

This White Paper is the main public outcomes of a six-month initiative called Fundchain. This intiative managed to create a common understanding of the Distributed Ledger Technology between ten key players, as well as the developments of a proof of concept using Blockchain technology in the area of asset management, and in particular in the fund-distribution value chain.

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Sprott – Institutional May 2017 Strategy Report

May 2017
Sprott Asset Management USA, Inc.

In our mid-April report, we highlighted ten market variables we view as bullish for the gold price. During the intervening month, these factors have remained generally supportive, yet spot gold has traced out a 6.28% correction (from an intraday high of $1,295.61 on 4/17 to an intraday low of $1,214.26 on 5/9). More than anything else, we view gold’s pullback as a reflection of persistent strength in U.S. equity markets.

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The Incredible Shrinking Factor Return

April 2017
Research Affiliates

In 2016, Research Affiliates published a series of articles1 challenging the “smart beta” revolution. We pointed out that, while there is merit in many factor tilt and smart beta strategies, performance chasing in these strategies—buying the popular outperforming strategies whose relative valuations are at extremely high levels—can be just as dangerous as performance chasing in other realms of asset management.

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Strategy Report

April 2017
Sprott Asset Management USA, Inc.

At Sprott, our investment thesis for gold is significantly long-term in scope. We believe gold’s methodical advance since 2000 has had more to do with the growing disconnect between productive output (GDP) and ever-inflating claims on that output (debt and equity valuations), than with short-term fluctuations in variables such as CPI-type inflation or interest rates.

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SPROTT Gold Report

April 2017
Sprott Asset Management USA, Inc.

Precious metals resumed their upward climb during the first two months of 2017. During January and February, spot gold rose 8.34% (from $1,152.27 to $1,248.33) and spot silver increased 15.08% (from $15.92 to $18.32). During March, however, precious metals suddenly reversed course, with spot gold ending flat and spot silver declining 0.3%.

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MCCM 1Q 2017 Market Outlook

Q1 2017
Morgan Creek

The protagonist of our letter last quarter was Roger Babson, the acclaimed entrepreneur, investor and philanthropist, who was the first financial forecaster to call the 1929 stock market crash and subsequent economic Depression. Babson reluctantly attended MIT and studied Engineering.

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FEG Insight – A Veteran CIO: You Can’t Teach an Old Dog New Tricks

March 10, 2017
Fund Evaluation Group

I was not at FEG long before a colleague of mine said to me “Mike, we would like you to write something on he lessons you’ve learned throughout your career.” Now, I have been a lot of things to a lot of different people throughout my career, but I never thought the day would come where I felt like the old dog. But you know what?
I have more than 20 years of experience as the Chief Investment Officer at several large endowments, I have lived and worked at several great colleges, and I have been privileged enough to meet some of the most interesting people in the world. Maybe it is time for reflection and hopefully some will find my thoughts useful.

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Strategy Report

March 2017
Sprott Asset Management USA, Inc.

Precious metals resumed their upward climb during the first two months of 2016. During January and February, spot gold rose 8.34% (from $1,152.27 to $1,248.33) and spot silver increased 15.08% (from $15.92 to $18.32). During early March, however, precious metals suddenly reversed course, with spot gold declining 2.30% and spot silver declining 5.29% through respective March 15 closes of $1,219.68 and $17.35. Without question, the greatest variable affecting precious-metal performance during recent weeks has been market handicapping of the Fed’s March 15 FOMC meeting. On 2/22/17, Bloomberg consensus expectations for a rate hike at the March meeting measured 34%. Ten trading days later (3/8/17), this percentage had swelled to 100%.

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Peninsula House – Bloomberg Reports Family Office 2017 Outlook

March 2017
Bloomberg LP

LORENZO SERVITJE SENDRA was the oldest person on the Bloomberg Billionaires Index when he died in February with a $4.2 billion fortune. Thinking ahead, the Mexican billionaire had already transferred his stake in Grupo Bimbo, the world’s largest breadmaker, to his heirs, enabling them to sidestep what amounts to a $2.1 trillion headache for the wealthy.

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Key Themes in Emerging Market Corporate Credit

March 2017
BlueBay Asset Management LLP

An uncertain policy dynamic and a period of recovery in distressed EM credit are adding to an already ripe opportunity set for the EM long-short investor.

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US Public Policy

January 25, 2017
Morgan Stanley

Market optimism, meet policymaking reality. Republicans should deliver some major changes. Yet conflicting motives & unintended consequences mean less confidence that policy supports risk appetite over time. We examine tax reform options, border adjustment consequences, & how compromises may emerge.

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A Smoother Path to Outperformance with Multi-Factor Smart Beta Investing

January 2017
Research Affiliates

Factor investing, also called smart beta, is rapidly displacing traditional stock picking—and for good reason. Traditional active management of equity mutual funds has delivered returns persistently below passive benchmarks. In contrast, many factor-based smart beta strategies have persistently outperformed the same capitalization-weighted benchmarks.

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2017.01 Broyhill Book Club

January 2017
Broyhill Asset Management, LLC

“The more that you read, the more things you will know. The more that you learn, the more places you’ll go.” ― Dr. Seuss

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8 Factors Driving Gold & Gold Equities

2017
Sprott Asset Management

“The risks associated with investing in a Trust depend on the securities and assets in which the Trust invests, based upon the Trust’s particular objectives. There is no assurance that any Trust will achieve its investment objective, and its net asset value, yield and investment return will fluctuate from time to time with market conditions. There is no guarantee that the full amount of your original investment in a Trust will be returned to you. The Trusts are not insured by the Canada Deposit Insurance Corporation or any other government deposit insurer.

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The Case for Mid-Cap High Yield in a Rising Rate Environment

2017
Phoenix Investment Adviser LLC

The economic argument supporting high yield in a rising rate environment is straightforward: if Fed policy is guiding rates up because the economy is strong enough to justify it (as is the case today), that economic tailwind can support increasing profitability and more cash flow for high yield (i.e., leveraged) issuers. Improvements on these metrics can boost the issuer’s credit quality, which in turn leads to tighter spreads on their publicly traded debt.

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Incorporating Marketplace Lending Into An Institutional Portfolio

2017
RiverNorth Capital Management, LLC

Since 2004, RiverNorth has specialized in the development of opportunistic investment strategies. In 2013, the investment team started taking a closer look at what RiverNorth believes are the attractive characteristics of marketplace lending (“MPL”): high coupons, short duration and low correlation to traditional assets. There were, however, a series of challenges that, at the time, prevented the widespread inclusion of the asset class in client portfolios.

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Sprott Institutional Strategy Report 2017 Outlook

2017
Sprott Asset Management USA, Inc.

During 2016, gold markets shook off three consecutive years of price weakness. Spot gold posted an 8.56% annual increase, rising from $1,061.42 to $1,152.27. Gold equities were among the best performing global assets, with the Sprott Gold Miners ETF (SGDM) rising 48.15% and the Sprott Junior Gold Miners ETF (SGDJ) surging 64.99%.

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Q4 2016 Market Review & Outlook

Q4 2016
Morgan Creek Capital Management

The first time I heard the name Babson was in 1980 when I was a senior in high school in Weston, Connecticut (serendipitous given some of the themes of this letter and coinciding with Reagan’s election). I was on a bus with my soccer team headed to Massachusetts to play weekend scrimmages against Babson College and Brandeis University. Our coach had convinced our parents that this was a college tour and showcase event where the college coaches would be evaluating us as potential recruits.

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Investing Wisely and Staying Wealthy

2016
American Timberlands Company, LLC

The U.S. stock market is near all-time highs, real government bond rates are essentially zero, the U.S. Fed is out of bullets and desperate to tighten, politics are preventing any fiscal stimulus, and China’s growth is slowing. Wise investors are seeking strategies which have downside protection, provide modest uncorrelated returns through cycles, and include opportunities to generate additional returns. Focusing on the macro-economic trends, identifying the best strategies within those trends, and utilizing experienced managers to take advantage of them should preserve and grow wealth.

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Documents for Medical Preparedness

2016
Chilton Trust Company

When considering estate planning documents, it is important to include advance health-care directives so your family and loved ones have the appropriate guidance to make the desired and responsible health-care decisions should you no longer be able to yourself. While it is difficult to think about injury or falling ill, none of us are immune to medical risks. Further, you have the right to direct your medical care. As such, having the right documentation to define and address your health-care needs and desires is imperative to ensure your caretakers have clear guidelines.

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Private Debt: The Opportunity for Diversification with Illiquid Assets

2016
TIAA Global Asset Management

Private debt is emerging as a potential solution for institutional investors confronting low interest yields and structural changes in fixed-income markets. Investors are turning to alternative credit in search of higher yield, better diversification, and lower risk than offered by traditional asset classes.

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Transparency and Sophisticated Simplicity in Wealth Management

2016
Chilton Trust Company

The investment management landscape continues to evolve and become more multifaceted with intricate investment options and solutions for investors. Yet, as the wealth management industry has become more complex, transparency – as it pertains to underlying investments, terms and fees – has rapidly declined. In 2008, stress and volatility in the markets tested the wealth management industry; many investors awoke to the harsh realization that their investments were not liquid or they could not immediately access their funds.

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Active ESG investing — The smart choice for bond investors

November 2016
BlueBay Asset Management LLP

Environmental, social and governance (ESG) investing involves investment strategies that proactively incorporate ESG or sustainability factors within the investment process.

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What If “Animal Spirits” Kick In?

November 28, 2016
Willis Investment Counsel

… due to the characteristic of human nature, a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation … most of our decisions to do something positive … can only be taken as a result of animal spirits – of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities. John Maynard Keynes, 1936.

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Targeted Rate of Return and Asset Allocation in a Low Return World

November 8, 2016
Willis Investment Counsel

…we believe a targeted return of inflation plus 4.00% may be incongruent with a preference for relatively stable portfolio values …we explain why we believe returns going forward could be lower than historical averages, and why targeted returns need to be revisited to reflect that possibility…

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VantagePoint: Fourth Quarter 2016

October 2016
Cambridge Associates

Bond yields have reached extreme levels this year amid soft growth, continued central bank purchases, and negative interest rate policies, dragging down prospective returns for a variety of asset classes. Capital markets are unlikely to deliver most investors’ long-term return objectives over the next five to ten years.

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Family Office Bulletin: Personal Excess Liability Insurance

October 2016
Chilton Trust Company

With all insurance, one wants to make sure that the essential levels and coverages are in place, not necessarily excessive levels and coverages. Excess liability insurance, commonly known as “umbrella” insurance, is somewhat of a misnomer and could easily be renamed “sleep at night coverage”. This coverage is a safeguard from which all individuals, whether considered high net worth or not, can benefit from and we have recommended adding an umbrella arrangement to many clients’ current insurance profiles. Most individuals consider themselves careful investors when it comes to considering risk. These same individuals typically have general property and liability policies, but not everyone has an umbrella policy. Umbrellas are reasonably priced and should be worth a second look. Umbrella policies can be offered and acquired through professional organizations (such as trade or business affiliations), your current place of employment and your current insurance carrier/broker.

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What Happens to Stocks When Interest Rates Rise?

October 28, 2016
Willis Investment Counsel

Despite conventional wisdom to the contrary, historically stocks have not necessarily performed poorly when interest rates rise.

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Asset Allocation Navigator

Q3 2016
BlueBay Asset Management

Brexit – the UK’s referendum vote to leave the EU – is a local difficulty but a global event for interest rates, further fuelling the search for yield. In our view an environment of lower for longer interest rates and positive, albeit mediocre, global economic growth and corporate earnings is favourable for positive-yielding assets, notably credit and emerging market debt. The search for yield is likely to continue to dominate markets, but the possibility of further episodes of volatility should not be ignored. US short-term interest rates are vulnerable to Federal Reserve rate hikes being priced back in, but not sufficiently to drive longer-term yields violently higher. We are fully invested, but our focus is on credit rather than term premium, with a bias for higher quality yielding assets and nimble portfolios.

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Rupture

September 28, 2016
Angeles Investment Advisors

The political experts were remarkably accurate in last week’s UK referendum on continuing to remain in the European Union, projecting a vote of 52%/48%. The actual final tally was 51.9% to 48.1%, so chalk one up to the pundits. Well, the numbers were spot on, but the sign was the wrong way: instead of a narrow victory to remain, the voters chose to exit. The Bloomsbury Crowd [a group of Cambridge-educated intellectuals who gathered in Bloomsbury, London in the early part of the 20th century to discuss and affirm the importance of themselves] was shocked (shocked!).

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Alts Are the Antidote to Active Management’s Hard Times

September 23, 2016
Partners Capital

A number of forces converged in the first half of 2016 to produce widespread underperformance among many highly respected active asset managers. While active management has been challenged since the financial crisis, recent losses appear to be a distinctly new phenomenon, by virtue of their sheer scale and concentration with managers that had defied gravity with superior performance over the past few years. For many institutional investors, including elite foundations and endowments that are now reporting their fiscal years ending June 30, 2016, such severe underperformance has many questioning whether they should abandon active management entirely for passive strategies.

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Janet Yellen Is Your Friend

September 16, 2016
Angeles Investment Advisors

I have not met Janet Yellen, but she seems like a perfectly friendly person. Yet, for some reason, investors seem to panic whenever she hints that the Fed is discussing whether and when to lift interest rates from close-to-zero to a smidgen above zero. That instinctive panic is not rational.

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Liquidity Management Solutions: A Changing Landscape

July 27, 2016
TriState Capital

There is a “new normal” in cash management. Banks and money market mutual funds are changing the way they treat deposits. If you are a steward of liquidity, you must get ahead of the perfect regulatory storm that may make traditional cash management and deposit strategies obsolete.

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Reality Comes Into Focus

August 2016
Lampe, Conway & Co.

Perhaps you’ve heard this one: An optimist, a pessimist and an optometrist start discussing the high-yield bond market… The optimist points to transactions like Dell’s $60+ billion acquisition and financing of EMC and exclaims “all right with the world, full steam ahead!” The pessimist shakes his head and warns “the Fed will need to raise rates to try to save off an economic calamity from 7 years of ZIRP.”

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Things That Make You Go Hmmm…

July 7, 2016
Grant Williams


Family Office Bulletin: Workers’ Compensation

June 2016
Chilton Trust Company

Chilton Trust’s Family Office Bulletin seeks to provide general commentary and guidelines on timely and relevant topics for clients and their families. While each situation is expected to vary based on each client’s individual situation and needs, the topics and discussion herein are intended to encourage thoughtful analysis. A Chilton Trust representative is always available if the observations or guidelines presented in this piece warrant additional attention and a follow up conversation regarding your particular circumstances or situation. Our mission is first and foremost to keep you informed and in a position where you can understand and evaluate your next steps.

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Simple Math: As Debt Refinancing Falls, Defaults Rise

June 2016
Lampe, Conway & Co.

For smaller, leveraged companies the absolute level of interested rates has now taken a back seat to the general lack of economic growth. A pervasive lack of revenue growth is limiting smaller companies’ ability to grow into their nnow enlarged and leveraged balance sheets. As a result, investors are becoming increasingly risk averse and wothdrawing support for these smaller, leveraged companies.

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CIO Perspective: The Art of Unlearning

June 9, 2016
Weiss

Historically, I’ve written papers when I felt there was something having to do with the markets or the economy that, in my opinion, differed from the consensus. After all, why write about your view if they cannot add value to people’s thoughts by providing another angle? Since writing the Hagler vs. Leonard: A Unanimous Descision for Emerging Markets paper back in February on my faith in emerging markets, much has changed in the markets.

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Other Voices: The psychological dimension: assessing character in manager due diligence

June 8, 2016
Partners Capital

As an Outsourced Investment Office acting for endowments and foundations, and ultra-high-net-worth families in Europe, North America and Asia, we advise our clients on their total investment programs, including asset allocation and portfolio construction. Most importantly, we provide access to what we believe are best-of-breed asset managers. A core focus of our firm is the identification of managers with true competitive advantages who will perform well in client portfolios over the long-term. Of increasing importance to our due diligence process is the assessment of the ethics, motivation and character of the senior leadership at an asset manager and, in the ase of activist managers, often of the CEOs of the companies they back with concentrated bets.

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Investment Principles for Endowment and Foundation Funds

June 2016
Willis Investment Counsel

Portfolio complexity does not equal superior performance. Complexity often increases risk. Therefore, employ only the degree of complexity that is required; and no more.

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The Preferred Market: An Overview

May 2016
Chilton Trust Company

Chilton Trust Company CIO’s Richard Chilton and Timothy Horan recommend that traditional municipal fixed income investors with the appropriate risk appetite should allocate between 15-35% of their fixed income asset allocation to the preferred (a.k.a. “hybrid”) security market.

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Why Invest in Emerging Markets Now?

May 2016
RWC

On price to book, emerging markets are trading at 1.4x book value which is just above levels seen during the Global Financial Crisis of 2008/2009 (1.3x) at a time when investors feared a global meltdown. One would have to assume we have a crisis similar to the 1997 Asian and 1998 Russian crises which drove valuations to below 1.0x book value; we don’t believe emerging markets are set for this type of crisis. In terms of other valuation metrics, if you look at markets such as Russia, Brazil and China H-shares, these are trading at price earnings multiples in the 6-8x range, with many of these economies experiencing slow growth or even recession.

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Floating Oil

May 24, 2016
Angeles Investment Advisors

Oil has had a nice recovery this year (see graph for Brent, YTD), up about 18% to over $48/barrel today. Of course, this is still well below the +$100/barrel we saw from 2011 through most of 2014, so will oil continue its climb higher?

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In the Triangle

May 23, 2016
Angeles Investment Advisors

Complexity makes investing so challenging. Unlike the pure sciences, there are no hard truths in investing, no discoverable axioms that determine outcomes with 100% confidence. At best, we can speak in probabilities, but even these probabilities come with large standard errors. Investing demands humility, even from the best of us.

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The Reality of Hangovers

February 2016
Lampe, Conway & Co.

For the past few weeks, investors in the leveraged finance markets have witnessed a stunning bounce in proces of high-yield bonds and leveraged loans, with HY fund flows have rebounded, approacing upwards of $5bn per week. While investors may be breathing a collective sigh of relief that the selloff has moderated, the question remaines whether this is a recovery or a pause.

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Angeles Investment Advisors – Commentary 2Q16

Q2 2016
Angeles Investment Advisors

University of Chicago is known for its excellent academics, not so much for its athletic prowess. But that wasn’t always the case. One hundred years ago, the Maroons1 were the premier football team in the land, winning multiple national championships, and led by the legendary coach Amos Alonzo Stagg.

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QUARTERLY OUTLOOK – Q2 2016

Q2 2016
Edge Capital

If you closed your eyes during the quarter, you missed one heck of a ride. The culmination of fears surrounding a Fed policy mistake, a crash landing in China, financial industry destruction by negative interest rates, and energy prices without a floor led to one of the worst starts to a calendar year in equity markets, only to bounce back off no real news at all.

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Market Review & Outlook

Q1 2016
MEKETA FIDUCIARY MANAGEMENT

While most global asset classes finished the first quarter of 2016 little changed from where they began the
year, this muted performance belies the tremendous volatility experienced over the past three months.

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Q1 2016 Market Review & Outlook

Q1 2016
Morgan Creek Capital Management

In April, nearly 400 years to the day after Shakespeare died, we lost another truly remarkable artist, Prince. In his career, Prince sold more than 100 million records, won seven Grammy Awards, a Golden Globe and an Academy Award. Prince was recognized by Rolling Stone magazine as the 27th most influential artist of the Rock Era and he was inducted into the Rock & Roll Hall of Fame in 2004. Prince Rogers Nelson was born in 1958 in Minnesota and grew up in a musical household where both parents were jazz performers. He was named after his father who performed under the stage name, Prince Rogers.

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CAPITAL MARKETS QUARTERLY 1Q16

Q1 2016
HIGHLAND ASSOCIATES

Today’s economic landscape is ripe with challenges resulting from diverging monetary policies and growth trajectories. We continue to grapple with low growth and low rates for a long time.

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Commentary 1Q16

Q1 2016
Angeles Investment Advisors

Some of the most impressive accomplishments in human history were born of vanity, some rose from sheer curiosity, some were driven by commerce, others by necessity. More than 4,500 years ago the Pharaoh Khufu (“Cheops” as the Greeks called him) built (rather, had slaves build) the Great Pyramid in Giza to ensconce his remains. A simple tombstone would not do for the great Pharaoh. For nearly four millennia it was the tallest structure in the world, the only of the Seven Wonders of the ancient world that has survived. Its ratio of perimeter-to-height is almost precisely 2π, suggesting that the Great Pyramid was not slapped together, but rather well-planned.

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Portfolio Strategy: Pro-Active “Diversification” and Beta Vulnerability

February 18, 2016
Morgan Stanley

Based upon Cambridge Associates reports, large US endowments continued their “diversification”, with the weighting of alternatives rising by 22% from 31% in FY 2000 to 55% in FY2015.This massiveshift was “funded” largely by reduced weightings in US equity and fixed income.

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Composition of GDP & Growth Dynamics in Frontier Markets

February 2016
RWC

The frontier markets classification includes some of the fastest growing, most populated and least integrated economies in the world and, importantly, some of the most undervalued equity markets.

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2016.01 Broyhill Book Club

January 2016
Broyhill Asset Management, LLC

Last year, I made a conscious effort to spend less time in front of the screens. With the help of Goodreads, I set a goal of reading one book per week. What follows is certainly not a list of the “One Hundred Best of all educative literature in the world.” It is simply one man’s attempt at shifting his lifestyle away from online diversions and optimizing his return on time invested. As it turns out, substituting television (the occasional Netflix binge permitted) and email for an Amazon Kindle has extraordinary implications for mindfulness and clarity of thought.

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GEM – China Thought Piece

January 2016
RWC

China’s GDP growth has seen a secular decline over the past several years from over 10% to the 6-7% range (Chart 1). The moderation in growth has been a welcome development, as it has been accompanied by a healthy rebalancing in GDP composition and move towards a more sustainable and inclusive growth dynamics (Chart 2).

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Capturing Alpha From Non-Traditional Sources

November 2015
RBC Global Asset Management

Many people who have managed portfolios for as long as I have feel that there has been too much change. I don’t think there has been enough.

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Adverse Active Alpha: Adding Value Through Manager Selection

September 29, 2015
Morgan Stanley

Proponents of passive investing note that active managers routinely under per form their benchmarks and thus invest in index funds. Active investors choose managers in hopes of outperforming indexes and the rewards of doing so can be significant.

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Q2 2015 Market Review and Outlook

Second Quarter 2015
Morgan Creek Capital Management

It seems a little funny that a country with a population equal to Ohio (11 million) and a GDP equivalent to Oregon ($240 billion) was all anyone wanted to talk about in Q2.

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Drop (in the bucket)

September 15, 2015
Angeles Investment Advisors

Markets will fluctuate, as Pierpont Morgan caustically observed. And “fluctuate” means down as well as up. Perhaps I, too, am being caustically obvious, but I’ve long believed that a broad perspective on markets can often bring more clarity than myopic obsession.

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Jobs

September 4, 2015
Angeles Investment Advisors

Markets have taken today’s employment release as evidence of a weakening jobs market. A mere 173,000 net new jobs were added in August, below the consensus figure of 217,000. But, coincidentally, 44,000 more jobs were added to previous months’ figures. So, you could say we were right on expectations.

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Revisiting the Case for the Endowment Model

June 2015
Athena Capital Advisors

Following strong relative US equity performance during the period 2009 – 2014, many investors have questioned the efficacy of the endowment model relative to traditional asset allocation strategies with higher weightings to US assets (for example, 60% US equities, 40% US-centric fixed income). In this paper, we assume that an investor constructing a mean-variance efficient portfolio as of December 31, 2009 possesses a degree of clairvoyance regarding the joint distribution of asset class returns (mean, variance, and covariance) over the subsequent five years. Despite the apparent adversity of such a scenario for the endowment model, we find that this process is more likely to lead to endowment-like portfolios than 60/40 portfolios, particularly when risk (volatility) is taken into account.

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Party Like It’s 1999?

June 12, 2015
Angeles Investment Advisors

Some observers point to the eye-popping valuations for companies with little revenue (WhatsApp, e.g., bought by Facebook for $19 billion) as indicative of an equity market that is partying like it’s 1999, and thus on the verge of imminent collapse.

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ACG – Global Fixed Income Market Update

August 2015
ACG

As volatility spiked across virtually all financial assets during the month of August, investors may feel as if they are hanging by a string.

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Global Macro Outlook

August 31st, 2015
Morgan Stanley Research

With growth still sluggish and new risks emerging, the global economy seems to be stuck in middle gear. As policy-makers are approaching key decisions, the macro debate has zoomed in on China, EM more broadly and the Fed.

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The 5-Minute Strategy Workout

August 20th, 2015
Morgan Stanley

Market Color – What’s On Our Minds?

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ACTIVE MANAGEMENT AND EMERGING MARKETS EQUITIES: Together They Work

June 30, 2015
RBC Global Asset Management

One important consideration investors have with regard to emerging markets (EM) investing is whether to employ active or passive management. In this paper we take a closer look at some of the fundamental challenges particular to EM and how active management helps overcome them.

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Wages

May 1, 2015
Angeles Investment Advisors

They’re going up. Total salaries and benefits moved up 4.4% in 2014, rising to 53.6% of GDP, still below historic averages, but a decided bounce off the lows recently seen (Chart 1).

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Part Two: Portfolio Management — How Exposure to Real Estate May Enhance Returns.

May 2015
American Assets Capital Advisers

Over the years we have had countless conversations with investors regarding their exposure to public real estate, primarily if, and how much to allocate. The purpose of this whitepaper is to frame the question within the rigor of the Markowitz Mean Variance Efficiency Frontier, the basis for Modern Portfolio Theory (“MPT”), for which Harry Markowitz was awarded the Nobel Prize in 1990.

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Valuation

April 21, 2015
Angeles Investment Advisors

Most observers would agree that equities are rich (expensive, overpriced, etc.).Corporate profits are at record highs, and the forward price-to-(optimistic) earnings multiple on the S&P 500, at 17x, is the highest since 2004.

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Opportunities More Compelling than Direct Lending

April 2015
Silver Creek

If asset growth confers status, then middle market direct lending should be considered today’s institutional darling. In 2014, direct lending funds accounted for nearly half of total assets raised across all private debt strategies.i Growth appears to be unabated: Preqin estimates that 72% of investors who are planning to allocate to private debt in 2015 expect to do so by investing in direct lending.ii However, expected returns are lower today than at any point since the Global Financial Crisis (“GFC”) and leverage levels are notably higher. Then why are investors continuing to allocate to the space? Are there no other opportunities with a similar liquidity profile that are as compelling?

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Negative Yields

March 19, 2015
Angeles Investment Advisors

One of the (many) perplexing phenomena facing investors is the persistent (and falling) low yields on government bonds.

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Rebalancings

March 16, 2015
Angeles Investment Advisors

One of the more common questions/comments we’ve heard from clients this quarter relates to the alleged benefit of global investing. Of course, this follows a year in which US equities gained 13% and non-US stocks fell about 5% (in USD terms), the widest performance gap since the 1990s. As usual, there were many valid reasons for this gap: the stronger economic growth and higher interest rates in the US favored dollar-based investors. And economic prospects, if anything, reinforced these trends: the gaps only widened in the second half of the year, promising a continuation of the trends favoring USD investors.

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Effective Endowment Governance: What Savvy Nonprofits Are Doing

February 2015
Athena Capital Advisors

In this article, we share some useful pointers on endowment governance to help nonprofits enhance oversight of their endowments and perform this role with distinction. Our comments are based on participating in hundreds of meetings, primarily with nonprofit Investment Committees with assets ranging from $25 million to over $1 billion. In these meetings, we developed a keen appreciation for best governance practices.

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Crude-awakening: Why oils self-correcting nature may soon dismantle the bear case

February 2015
Wellington

After AdecAde of relAtive stAbility, oil-market volatility has skyrocketed recently, sending the price of brent crude down from over Us$100/barrel in early 2014 to Us$46/barrel by year end. Global industry Analysts Nilesh Undavia and Mark viviano spoke in January at our 2015 commodities forum about the macro and microeconomic forces that drive the global oil market, and why they believe the commodity’s “self-correcting” characteristics will help normalize the price of oil over the next 12 months. following is an edited transcript of their remarks.

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DoDiligence™ – Reinventing The Due Diligence Process

2015
Uncorrelated, LLC

DoDiligence™ – Reinventing The Due Diligence Process provides guidelines and recommendations for any institution that is looking to redo their due diligence processes.

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MCCM 1Q 2015 Market Outlook

Q1 2015
Morgan Creek

The father of the hedge fund was Alfred Winslow (A.W.) Jones. Jones was born in Australia, graduated from Harvard, was a U.S. diplomat and earned a PhD in Sociology from Columbia, before becoming a member of the editorial staff at Fortune magazine where he was inspired to try his hand at asset management while writing an article about current investment trends in 1948. He raised $100,000 (including $40,000 of his own money) and created a partnership that employed a long/short equity investment model where he combined leverage and short selling of securities, as a means to control risk and produce more stable returns.

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British Origins of US Endowment Model

2015
CFA Society North Carolina

The US endowment model is an approach to investing popularized by Yale University that emphasizes diversification and active management of equity-oriented, illiquid assets. The writings of the British economist John Maynard Keynes were a considerable influence on the investment philosophy of Yale’s chief investment officer, David Swensen. How did Keynes gain these insights? We track Keynes’s experiences managing the King’s College, Cambridge, endowment and show how some of the lessons he learned remain relevant to endowments and foundations today.

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Private Debt Market Outlook – 2015

2015
White Oak Global Advisors

The U.S. economy continues to show signs of improvement, and demand for financing from middle-market borrowers is increasing. The primary driver for additional demand for financing is growth in U.S. GDP fueled by continued economic expansion, along with lower oil prices, unemployment and interest rates.

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TIAA-CREF

Q4 2014

TIAA-CREF helps provide lifelong financial security for those in the academic, cultural, governmental, medical and research fields. We invest for the long term and apply our deep expertise across a wide range of traditional and alternative assets. Our mission to serve, our record of performance and the values we embrace make us a different kind of financial services company.

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Global Portfolios

Q3 2014
CFA Society North Carolina

Current institutional portfolios have many challenges. An investment framework of value considers diversification, the true meaning of assets in a portfolio, and risk rebalancing—not rebalancing capital each quarter but rebalancing risk. Finally, tail risk management must be managed opportunistically.

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Exotic Beta Revisited

September 2014
CFA Institute

The authors propose portfolios comprising simple and intuitive risk premiums (exotic betas) that are transparent and cost effective, perform well in different market environments, and are uncorrelated with equities. They are an alternative to traditional portfolios that are defined by their asset class allocations. The authors
show that exotic beta investing offers a better risk–return profile than risk parity and hedge fund replication and that adjusting exposures to capture variation in risk premiums further improves performance.

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Dust off The Bassinet Leighton Tendencies

August 27, 2014
Leighton Strader

This is our most recent edition of the blog, Leighton Tendencies. As the self-anointed editor the objective is to create a medium to instruct, let off a little steam, and provide insights on the obvious and not so obvious goings on in the world of investment management.

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How to Walk Through the Field…… Leighton Tendencies

September 12, 2014
Leighton Strader

I vividly recall sitting in the front row in Sunday School, and listening to our teacher, Jimmy Christian….no joke…really his name…and his asking the question, “If you are walking through a field, would you walk looking down as not to trip on something or would you walk, focused on the other side of the field where you’re going?” Being a bright farm-boy, (https://leightontendancies.files.wordpress.com/2014/08/farmboys.jpg)I shot my hand in the air, “Mr. Christian, I walk looking down so not to trip on anything or step in anything.” Laughter from my mates.

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Identifying Opportunities in a Challenging Short Selling Environment

September 2014
Fidelity

In this white paper, we will dissect the transformation underway in the U.S. securities lending market by analyzing its liquidity characteristics, the dynamics impacting short demand, and potential regulatory pressures. The genesis of this research has been the consistent lament of short-focused hedge funds over a steady increase in their financing rates. Our findings evidence an opportunity for hedge funds and prime brokers to partner and combat continued rate pressures.

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Values-Based and Impact Investing: An Introduction

February 2014
Athena Capital Advisors

Impact investing is investing with the intent to earn a financial return while creating a positive social impact consistent with an investor’s core values. Impact investing is one of several values-based investment techniques that lie along a continuum between traditional risk/return based investing and philanthropy. One of the most important recent developments in this field is the increasing number of investment opportunities that are structured to earn both a market rate of return and provide impact, as this type of structure is appealing to a much broader audience than values-based investments with limited returns. In effect, these investments lie on a new “efficient frontier” in investing that encompasses risk, return, and values-based impact.

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Portfolio Whiteboard Project whitepaper

September 2013
Uncorrelated

The Portfolio Whiteboard Project brought together the next generation of institutional investment leaders with asset managers to define an asset allocation model for the future. Institutions need to go back to the drawing board, but not for the reasons we originally believed.

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Shah Capital Urges Changes at China Yuchai International

June 18, 2013
MoneyBeat – WSJ

A major investor of China Yuchai International Ltd. , a Singapore holding company for a Chinese diesel engine manufacturer, is proposing the company increase its stake in the manufacturer, among other changes.

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Revisiting the Winners’ Game

June 2013
Balentine

During the past few years, investment professionals have been accused of violating their fiduciary duties and providing subpar performance in exchange for costly fees. Yet, many investment professionals are careful stewards of client assets. They are defined by four elements that serve as benchmarks for industry best practices. Investors can regain confidence in advisers and the industry by asking five key questions to identify such stewards.

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Archived Resources

Power Play: The Calm Before the Storm  October 2012 Venor Capital

Shah Capital – You’re missing the great China value trade  August 15, 2012 Absolute Return – Alpha

The Case for Cash  July 2012 Balentine

The Merits of Dividend Investing  January 15, 2012 Altrius

Reality Vs. Delusion: What did those marketers just say?  Leighton Strader

Investment Knowledge When You Need It  Solovis

Cutting Through the Confusion of OCIO Fees  Strategic Investment Group

OCIO Performance Measurement and Analysis  Strategic Investment Group

Take Control Through Outsourcing  Strategic Investment Group

The Art and Science of Manager Termination  Strategic Investment Group

Investment LAB Report-Energy Revolution  Uncorrelated