President Joe Biden’s executive order targeting U.S. investments in certain industries in China has raised questions about its impact on global markets and investment portfolios. In examining its potential effects, NEPC’s Senior Investment Director, Jennifer Appel, shares her insights on what the executive order means for investors. She also provides perspectives on Chinese private markets, China’s debt levels, the high unemployment rate and uncertain economy, and the long-term views on investing in China.
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With below-average returns expected over the next five years, it’s clear that getting asset allocation right will be essential to delivering on the key challenges of our time: achieving purchasing power parity and avoiding any permanent capital impairment. By using a forward-looking, historically-aware framework for developing long-term return forecasts across asset classes, there are key considerations and underlying themes for family office and long-duration investors to keep in mind to help tackle their strategic and tactical portfolio construction decisions.
The traditional 60/40 portfolio—a mix of 60% stocks and 40% bonds—is suffering through one of its worst periods in history. Although the demise of the 60/40 portfolio has been predicted before, investors may now face a new regime of high inflation and rising correlations between equities and fixed incomes. For investors in hard-hit 60/40 portfolios, there is an alternative—the 80/20/40 portfolio with an option overlay—that may provide diversification without triggering adverse tax consequences, and may exhibit a better risk-reward profile, with lower volatility.
Over the last few decades, the lackluster performance of traditional active managers has fueled the rise of “closet indexing.” For some, this trend, and the related systemic underperformance of the active management industry, have renewed interest in concentrated investing in pursuit of improved investment performance. This paper leverages empirical evidence and expert insights to outline the merits of concentrated investing as an alternative or complement to more diversified solutions.
When it comes to investing with environmental, social, and governance (ESG) concerns in mind, there’s the aim to help foster positive change in the world through the lens of one’s personal values. Since it can be hard to decipher the news about ESG investing, here is a breakdown of some frequent ESG misconceptions and answers that address four questions: (1) Is ESG investing only for environmentalists? (2) Can ESG investing go beyond excluding certain investments? (3) Will ESG investors outperform the market? (4) How should you start investing with ESG in mind?
A dynamic portfolio can help address a number of investment challenges that families of wealth face, including varying multigenerational preferences, unique tax considerations, domicile requirements, and specific beneficiary needs. Yet there is also such a thing as overcomplexity, which can waste time, cause confusion, decrease potential returns, and increase risk. This paper reviews three indicators of an overly complex portfolio and discusses best practices for addressing them.
Consistently revisiting potential liquidity risk is important work for family investors, as many of these risks can lay silent for prolonged periods and become easy to overlook. In fact, unexpected liquidity demands can undo a lot of hard work and, in a worst-case scenario, force a fire sale of assets.
Investors have been looking for a recession amidst rising interest rates and expectations for slowing growth, but continued growth in much of the economy and resilient investment performance in 2023 has made for a very murky economic puzzle going forward. Exogenous factors such as geopolitical instability, deglobalization, and continuing risk of a U.S. government shutdown add complicating risk factors to the economic outlook.
For leaders of founder-owned companies, simply making the decision to sell or bring in an outside investor can be anxiety inducing. The transaction process itself is often filled with apprehensive moments—arguably none more so than the potential of sensitive information leaking. This primer helps business owners understand how to avoid leaks, how they might emerge, and how to handle them. It details three common scenarios: (1) when there are signs of a possible leak; (2) when signs of a leak are clearer; and (3) when media coverage appears imminent.
As auction sales level off in 2023 from the highs reached a year ago, the art market recalibrates with more conservative pricing, risk management, and an unquenching demand for A+ works. Heading into the fall season, art prices are expected to continue stabilizing. And while some collectors operate more conservatively, others will see opportunities in acquiring fresh work by mid-career artists. In addition, there is strong momentum and innovation in the broader art ecosystem, such as mergers and acquisitions, the rise of artificial intelligence (AI), and an evolving museum landscape.