Risk Parity: A Primer
I recently wrote an article on risk parity for a CFA Institute publication on multi-asset-class strategies. This excerpt from that article covers all the basics and should put you well on the path to risk parity expertise. “Risk parity” is a term used to describe investment strategies where capital is allocated across asset classes so […]
In Context: Global Small Cap Equity
In small cap investing (U.S., international, emerging market, and global small cap) there are exploitable inefficiencies that are less available in large cap. Read on to learn more about some of the opportunities and challenges in this space. Earnings revisions: In the large cap space, companies are typically covered by many sell-side analysts that are […]
2017 National Conference: On the Rising Opposition to Globalization
Callan’s 37th annual National Conference drew a range of high-profile speakers who touched on a diverse slate of topics in their talks for the more than 500 people who attended this year’s event. This post and ones later will recap their views on key economic and geopolitical issues. This year’s conference came in the wake […]
In Context: Market Volatility
Yesterday, equity market volatility touched off a host of headlines and commentary. Here, we present a longer-term context around market volatility. Market volatility can be measured in a number of ways. We address three in the following exhibits, two historical (or experienced) and one expected (or implied). Sizable Daily Moves The table below shows a […]
(No) News at 11:00 – Fed Raises Interest Rates
Yesterday, the Federal Reserve raised short-term interest rates in the U.S. by 25 basis points, or one-quarter of a percent. Fed Chair Janet Yellen said, “the simple message is that the economy is doing well.” The Fed’s announcement was likely the most widely telegraphed and fully expected policy move in its history. The stock market […]
Alternative Facts and the Evolving Role of Hedge Funds
Download PDF Hedge funds have faced a difficult stretch, underperforming less-expensive alternatives for years. However, as lightly regulated managers with few investment constraints, hedge funds have a distinct advantage over traditional investments such as mutual funds. For this quarter’s Fiduciary Perspectives essay, “Alternative Facts and the Evolving Role of Hedge Funds,” I reflect on the current market environment affecting […]
Fixed Income Observations
View Research How are investors responding to the prospect of rising rates? Here’s a look at plan sponsors’ reactions and some potential enhancements to the fixed income structure. Public funds, endowments, foundations, and Taft-Hartley plans have all steadily reduced their allocations to fixed income; the one exception, corporate funds, has been increasing fixed income exposure […]
Capital Market Projections 2017
View Charticle View Research Each year, Callan develops long-term capital market projections, detailing expected return, standard deviation, and correlations for major asset classes. These projections are the cornerstone for strategic planning. From our Capital Markets Research group: Over the next 10 years, we forecast annual GDP growth of 2% to 2.5% for the U.S., 1.5% to 2% […]
Periodic Table of Investment Returns
One glance at the crazy quilt of colors in the Periodic Table of Investment Returns suggests the challenge investors face in picking an investment class “winner” year-by-year and illustrates the benefit to diversification. Last year offered investors a wild ride, with sentiment overwhelming fundamentals for much of 2016. Bonds rose in value and stocks fell […]
Risky Business
Download PDF Interest rates are historically low in the U.S. and abroad. Couple this with modest growth, and fund sponsors reluctant to lower return expectations face one of the most difficult investing environments in history. To find out how difficult, our experts wondered, “What would an investor need to do to achieve a 7.5% return […]