Investing without Regard to Benchmarks
Benchmarks have long served several critical purposes in investing, such as providing guidance on how portfolios should be managed and serving as a hurdle for measuring performance. However, many investment managers and strategies eschew benchmarks, asserting that they inhibit good portfolio management.
High Frequency Trading and Your Portfolio
In existence since 1999, HFT utilizes technology to make quick trading decisions, often within milliseconds. Estimated at 50% of all equity transaction volumes in the US, some believe that this trading strategy provides a great deal of benefit to overall market structure in terms of increased liquidity and tighter bid/ask spreads.
A Primer on Custom Target Date Funds
Custom target date funds are a topic that many defined contribution plan sponsors have been asking us about. The HEK Blog did a short interview with Scott Fisher, who heads our custom target date fund team, to expand on some of the questions that he hears from clients and the things that he observes in his conversations with them.
Five Trends to Watch in Public Pension Fund Governance
The investments of public pension fund assets are handled by entities with a variety of governance structures. According to the Government Accountability Office (GAO) the U.S, has over 3,400 public retirement systems covering over 27 million members and beneficiaries. They range in assets from a few million dollars to over $300 billion. For the most part, these systems have defined benefit plans; however, some have defined contribution plans, cash balance plans, hybrids, or multiple plans. One thing these governmental plans all have in common is their legal status as tax-exempt trusts.
Investing With a Purpose: Evolving approaches and current trends
“Investing with purpose” is a concept raised frequently in high-level portfolio conversations. What was once discussed as an ideal hypothetical has evolved and continues to mature into an investment field with broadening choices and innovative uses. A diverse set of institutions and individuals “invest with a purpose,” and for this reason, a general review of the field’s current state and potential directions is useful to institutional investors.
Implementing High-Conviction Equity Portfolios
Last year, we wrote the white paper “Conviction in Equity Investing,” lauding the benefits of high-conviction investing for actively-managed equity mandates. This blog entry follows up with suggestions for institutional investors utilizing this approach to design their equity portfolios.
What to Do With Underperforming Managers
Conventional wisdom says “buy low, sell high.” Investors should enter a position at an attractive price point and liquidate it after strong performance. At least this is conventional wisdom for trading individual securities. When reviewing the hiring and firing decisions for institutional investment managers, investors frequently do the opposite.
Diversification – How Much is Too Much?
In the investment world, diversification has always been a cornerstone of good portfolio management. We believe in it and advise our clients to diversify their portfolios across asset classes and investment strategies. But can there be too much diversification? We think the answer is yes.
Defined Contribution Plan Re-Enrollment: Responsible Redirection or Wrong Direction (An Investment Perspective)
DC plans are by their very nature participant directed, so the thought of overriding a participant’s own decisions may seem foolish. We disagree. In some cases, we believe that a “re-enrollment” or “re-booting” process may be just the right direction.
Breaking Down Barriers to Success
Achieving return expectations in today’s evolving markets is possible, but maximizing your chances of success requires flexibility and, occasionally, quick action. Yet, institutional investing practice sometimes moves more slowly than investing ideas. Here are six ways to stay ahead of the curve with your portfolio construction and decision making.