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.

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.

What comes to mind when you hear someone mention energy investments? Most likely and especially in this state, thoughts turn to oil and gas. Investments might include stock in companies like ExxonMobil or Valero, maybe an allocation to an MLP strategy, or even a private equity investment in oil production from Texas’ Permian basin. No matter the flavor, most people think oil when they think of energy, and rightfully so as oil and natural gas make up almost 70% of U.S. energy supply.  

Interest rates in the US have recently begun to move higher after having collapsed last year following the onset of the COVID-19 pandemic. While there are numerous contributors to the move higher in interest rates, the primary catalysts are the expected increase in US Treasury issuance in order to fund the stimulus and the slow reopening of the US economy which may lead to increased economic growth. Given this backdrop, we look to explore the potential ramifications of higher US interest rates on equity prices and the resulting implications for client portfolios.

US core inflation likely will be volatile during 2021, as underlying economic forces continue to rebalance from the pandemic. The gap between actual and potential output will limit how much inflation can ultimately rise this year, leaving the Fed comfortable maintaining easy policy.

While we are favorable on the overall outlook for emerging markets (EMs), there is a wide disparity in the pace and stage of their recoveries from economic disruptions caused by the COVID-19 pandemic. While gross domestic product (GDP) expectations for all EMs decreased significantly because of the pandemic, this delta is significantly smaller for countries such as China that were among the first to experience widespread infections and implement measures to control the pandemic.

The term “infrastructure” has come to the forefront in recent months thanks to the Biden administration’s focus on renewing and improving America’s physical footprint through additional fiscal stimulus. It also has a dual aim of improving the pace of economic growth.