Partner Content
In this supplement, we introduce our new Market+ solution, present a novel risk management technique, highlight the importance of economic risk in driving equity portfolio returns, discuss new approaches to Quality and Defensive investing, examine factor investing in emerging markets and share insights on integrating climate opportunities and solutions into strategies.
From reassessing strategic asset allocation and refining fixed income exposures to a more selective stance on private markets and alternatives, public defined benefit plans are actively engaged with their asset managers as they seek to continue to hit their target rates of return. More diversification within and across asset classes and a careful watch on potential downside risks are top of mind, as are the need to institute tactical flexibility in the current markets.
Institutional investors looking for diversification, inflation hedging and income generation should take a closer look at a range of real assets, including infrastructure and real estate, to act on some timely opportunities. They can consider multi-asset exposures in a diversified real asset portfolio or specialized exposures in areas like commercial mortgage loans, depending on their investment horizon and risk-return objectives.
Asset-based private credit, one of the fastest-growing segments within this asset class, can offer uncorrelated returns to both traditional fixed income and direct lending. The current opportunity set, that includes commercial credit, mortgages, specialty equipment and infrastructure, is supported by a host of market and macro fundamentals and is able to provide institutional allocators with a differentiated income-based strategy in private credit.
DC plan participants need guaranteed income to achieve financial security through their retirement years — and solutions today have evolved to provide the flexibility, customization, and ease of use that plan sponsors are looking for. Lifetime income delivers a range of benefits for both participants and plan sponsors. Thoughtful implementation within the DC plan can make adoption and usage easier. A clear and compelling educational approach for all stakeholders involved goes a long way in making retirement income a success.
An updated resource for defined contribution plan sponsors on the latest research, best practices and implementation steps for lifetime income solutions. It delves into establishing plan objectives, addressing longevity risk in plan design, and evaluating the range of retirement income product offerings, including the benefits of providing lifetime income within the default solution. Key success factors include flexibility, a well-defined framework and solving for individual outcomes, which is detailed in a case study of a successful in-plan implementation.
In this supplement, we explore the EU Taxonomy for Sustainable Activities; Social Risk Sector Ratings; the financial risks posed by climate change; the findings of a survey on physical climate risks; the risk and value of Thames Water; and the challenging goal of achieving diversification in unlisted infrastructure investments.
This informative resource for institutional allocators in fixed income — updated for the 2024 market environment — highlights the attractive all-in yields available across the risk spectrum and shares perspective on market segments that present opportunity for return and diversification. Active management for fixed income is more important today, with the ability to provide custom, flexible approaches that meet the portfolio objectives for different types of allocators.
As asset owners continue to embrace sustainable investing, its definition and applications are broadening and they are taking highly differentiated approaches to access investable themes such as the energy transition, biodiversity and stewardship. While climate risk mitigation and renewable energy are top themes, data availability and benchmarking have become more granular. Investors are also taking a holistic view of their investments in terms of comparative long-term governance and economic development trends.
Collateralized loan obligations are powered by supportive fundamentals on the issuance side and attractive risk-reward characteristics on the investing side – scaling it up the diversification menu for more institutional allocators. As the largest securitized asset class, it is being used across both fixed income and alternative allocation sleeves, and investors can expect volume to continue to grow in the current market environment.
