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Learn Why the Asset Class is Often Overlooked

Often an overlooked asset class, we believe that CLO equity deserves strong consideration as a strategic allocation given its attractive historical return profile, time-tested proven structure, and potential diversification benefits the asset class can provide a broader portfolio.

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A Complementary Source for Additional Yield

  • Although institutional investors’ allocation to publicly traded investment grade (IG) bonds is essential for liquidity and stability, yields today are historically low. The typical corporate pension fund, for example, with a fixed income allocation of close to 50%1 and long-term performance goals averaging 6.5%,1 faces a wide return gap to be filled.2

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Should EM Investors be Worried About Tapering?

Although the Fed looks likely to tighten policy sooner than previously expected, the 2013 “taper tantrum” should be avoided. But tapering will still have a variety of implications for emerging markets.

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Exploring Consumer Trends: Whitepaper

Emerging markets offer attractive investment opportunities, supported by favorable economic fundamentals and a rapidly expanding middle class. But classic consumption patterns appear to be evolving, and this could have implications for emerging markets investors.

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European Bank Valuations are at a 33-year Low

With European bank valuations at a 33-year low, let's examine why this may be this best time to invest with the right strategy.

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How Investors are Reevaluating Their Traditional Allocations so They are Aligned with Current Investment Opportunities

The impact of COVID-19, which surfaced in the U.S. over a year ago, continues to shape the global economic backdrop. As a result, many investors have started to reassess their traditional allocations to better align with the opportunity set going forward.  For many credit investors, downside protection, capturing incremental yield premium and the threat of rising rates have become top of mind. To meet these goals, many have turned to the private credit asset class, specifically middle-market direct lending, which, in addition to offering these characteristics, has continued to benefit from on-going secular trends.  

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3 Indexing Best Practices

We recently worked with a client as it was evaluating a passive investment in large cap U.S. equity. After a discussion about the two most common indices used to represent the large cap U.S. equity market and what would be most appropriate for this investor, a committee member made a very interesting observation:

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China's Transition to Greener Economy to Create Diverse New Investment Opportunities

China’s 2060 carbon-neutral framework not only addresses climate change, but also discreetly reveals how Beijing envisions the country’s economic future. As efforts to generate more sustainable growth progress, the transition to a greener economy will create diverse new investment opportunities. 

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What Investors Should Know About the Sustainability Revolution

The world is aggressively seeking sustainability. While the topic has been around for perhaps a decade, the “awakening” really hit the public consciousness in 2020 and has now become a mega-theme. It’s transitioning into a revolution and shepherding an era of conscious capitalism that’s playing out across the investment landscape. This is not the traditional socially responsible movement that has historically involved divestment from tobacco, weapons and other so-called ‘sin’ stocks. This is about driving returns first, while providing social and environmental benefits.

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2020 Developments in Securities Litigation Outside the US

While the world may have been on lockdown for most of 2020 due to the global COVID-19 pandemic, there were significant developments in non-U.S. securities litigation.

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Will Work-from-home Change the Future of Office Space?

With vaccines rolling out across the globe, many see a light at the end of the tunnel for the COVID-19 pandemic. But government-imposed lockdowns and social distancing restrictions in response to the pandemic have had major effects on the working lives of office-based employees. For much of 2020, many employees worked from home (WFH), and survey-based data show that the appetite has grown for more permanent flexible working arrangements. Many employers appear to be acknowledging this desire for more hybrid remote work as they assess longer term office space requirements. What are the potential impacts on office space, commercial real estate, and urban centers from this kind of shift?

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What Does a Post-vaccine World Look Like For Real Estate Valuations?

The past year has been one of considerable disruption in the way we live, work and play.  We have seen shifts in sentiment around the value of the real estate in which we conduct these daily activities. As we look to a post-vaccine world where a return to normal is in sight, we are asking ourselves: How much of the distress has been temporary and what has been permanently impaired?  At CenterSquare we have found that when it comes to real estate valuations, the REIT market offers early insight into the direction of pricing, with the private market eventually catching up. As we look out over the next several years, the REIT tea leaves provide a great deal to consider.

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How to Improve Your Fund's Rate of Return

2020 was an incredible year in the capital markets. However, in the wake of very strong performance for both stocks and bonds over the past 12-months, as well as the past decade, most traditional assets are looking expensive. At the same time, concerns over inflation continue to build, and questions about the trajectory of Fed policy dominate investment conversations.

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The Dangers of Relying on Custodians to Collect Class Action Settlements

Institutional investors—including public pension funds, Taft-Hartley funds, mutual funds, and hedge funds—have a fiduciary obligation to recover monies lost through investments in public securities as the result of corporate mismanagement and/or fraud. These losses are often recouped through class action litigation, which pays out billions of dollars to defrauded investors each year.[1] When these lawsuits are settled, however, institutional investors often assume that their custodian will file a claim and collect the funds on their behalf. Unfortunately, this approach almost always leaves such institutions short, and benefits more savvy-minded institutional investors who often pick-up the money left on the table by those relying on their custodians.

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Is Now the Time to Buy Fixed Income?

Despite the Federal Reserve’s promise to keep the federal funds rate low and support the bond market via quantitative easing, interest rates have seen an acute increase since August 2020. The yield on the 10-year Treasury was 0.52% on August 4 and stood at 1.74% on March 31. Additionally, the U.S. Treasury yield curve has steepened dramatically since August, reflecting rising inflation or growth expectations. The “2s/10s” curve has steepened from around 0.50% to nearly 1.10% over the past year.

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Signs of Life in the Hospitality and Real Estate Markets

Throughout the pandemic many areas of real estate have suffered under the myriad of lockdowns and capacity restrictions needed to slow the progression of the virus. Office, retail and hospitality have all been hit especially hard. Unlike its counterpart, office space, both hospitality and retail have been suffering from the mass reduction of foot traffic from lockdowns and the lack of disposable income as mass unemployment has flooded the county over the past year. 

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Don't Be Afraid of the Inflation Bogeyman

TEXPERS invited two experts with Putnam Investments, an Associate member of the association, to discuss inflation expectations. Shep Perkins, CFA, is Chief Investment Officer of Equities at Putnam and Donald E. Perks is a Quantitative Analyst with the firm.

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The Future of the Service Provider Evaluation Might Already Be Here

The process of evaluating investment managers has evolved in the last several decades. In addition to comparing a manager to its benchmark, investors can compare peer groups, other investment products, and even factor-based funds to see how their manager “stacks up.”

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Your Pension Fund's ESG Policy and Strategy

What do pension funds in Australia, France, Sweden and Texas have in common? Definitely not their asset allocation, level of transparency, governance system or cost structure.

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Why the Private Credit Market is Growing Fast

As interest rates on investment grade bonds have fallen to near-zero, private credit has attracted increased interest from institutional investors. Callan expects that private credit will offer substantially higher yields and equity-like total returns while in some cases providing regular cash distributions. In exchange, investors must accept illiquidity, with individual loans having an average life of three to five years and fund terms typically ranging from five to ten years. Additionally, private credit potentially incurs higher credit risk as borrowers are often smaller than those able to access traditional credit markets.

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