FEG’s RESEARCH & INSIGHTS

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Posted by FEG on June 13, 2019
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May 2019 Research Review

Throughout May, the U.S. government stepped up pressure on many of the country’s key trading partners. The market responded with a flight-to-quality rally that punished equities and helped send U.S. interest rates to the lowest level in two years.
Posted by FEG on June 13, 2019
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Opportunity Zones: Cutting Through the Hype to Understand the Real Risks and Rewards of the Latest Investment Craze

Opportunity Zones have captured the attention of the investing world; even the name itself impels a sense of urgency and excitement, the potential to make a great investment. The hype surrounding substantial tax benefits, paired with the notion of doing good in underdeveloped and economically challenged areas, has unleashed a torrent of interest.
Posted by FEG on May 29, 2019
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GOVERNANCE SERIES: The Importance of Investing for Nonprofit Organizations

Trustees, or those who sit on investment committees or boards for nonprofit institutions have to guard not just against decisions that could adversely affect the organization’s funding for one, five, or 10 years from now, they have to be cognizant of making decisions that could impact the funding decades from now.
Posted by Map { "displayName": "FEG" } on May 20, 2019
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First Quarter 2019 Private Capital Quarterly Review

Is preliminary private fund data a fair reflection of “fair market value”? Some argue this latent pricing effect distorts true value and unfairly smooths volatility measures; specifically, standard deviation of quarterly returns. Others note the valuation process for private funds appropriately reflects the long-term holding periods for these assets. Read FEG's First Quarter 2019 Private Capital Quarterly to learn more.
Posted by FEG on May 14, 2019
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April 2019 Research Review

A major theme throughout 2018 and 2019 is the U.S. economy’s resilience amid a broader global slowdown. Not only has the U.S. economy weathered choppy waters — much of which has been driven by trade-related growth concerns — the economy also appears to be flourishing.
Posted by Map { "displayName": "FEG" } on April 19, 2019
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First Quarter 2019 Market Commentary

There was little follow-through into the first quarter after late-2018’s risk-off market environment, with strong returns generated across nearly every major asset class in the first three months of 2019. Underpinning the sharp performance reversal were expectations for Chinese-related tailwinds, including fresh rounds of fiscal stimulus and a potential easing of trade tensions with the United States, as well as an increasingly more accommodative global central bank policy path.
Posted by FEG on April 15, 2019
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First Quarter 2019 Research Review

The fourth quarter marked the reversal of optimistic sentiment and positive market returns. The return of volatility and substantial daily market declines brought risk aversion to the forefront of investors’ minds and spurred a flight-to-quality.
Posted by FEG on April 1, 2019
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FEG Insight: Investing with the Head and the Heart

If an organization were a person, the head would be responsible for earning the dollars and the heart would be responsible giving them away. The two need not remain separate, however, as impact investing seeks to combine the desires and functions of both the heart and the head.
Posted by FEG on March 18, 2019
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February 2019 Research Review

Broad market performance in January was notably strong, following a dovish pivot by the Fed and expectations for fresh Chinese stimulus. However, excess reserves on the Fed’s balance sheet are in decline and may serve as a critical near-term headwind.
Posted by Map { "displayName": "FEG" } on February 27, 2019
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Fourth Quarter 2018 Private Capital Quarterly Review

Most of the performance data in this report is through September 30, when "blue skies" prevailed. By year-end, however, sentiment had shifted dramatically. As such, private fund investors should anticipate some degradation in valuations in fourth quarter reports, particularly in holdings that are energy-related, credit-related, or valued based on public market comparisons—real estate and infrastructure generally excluded. There is a tricky balance between caution and opportunity, but if the general backdrop remains accommodative, more years of blue skies are possible.
Posted by FEG on February 20, 2019
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FEG Insight: 2019 Fixed Income Market Outlook -- Three Big Things

FEG’s Head of Global Fixed Income and Credit Keith Berlin has expanded his annual credit market review to tackle all of fixed income. Keith focuses on three big things that he thinks have the potential to impact portfolios: changes in core markets due to increased Treasury issuance, the growth of BBB-rated corporate issuance, and the evolution of private credit. Watch a short video and read the full article to learn more about the three big things facing fixed income investors.
Posted by FEG on February 18, 2019
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January 2019 Research Review

Broad market performance in January was notably strong, following a dovish pivot by the Fed and expectations for fresh Chinese stimulus. However, excess reserves on the Fed’s balance sheet are in decline and may serve as a critical near-term headwind.
Posted by FEG on February 11, 2019
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2019 Investment Opportunities & Risks

Every year, FEG develops a look at market and asset classes for our clients. In this recorded presentation, Chief Investment Officer and Head of OCIO Alan Lenahan and Chief Investment Officer and Head of Research Greg Dowling hit the high points of this year's report.
Posted by Map { "displayName": "FEG" } on January 22, 2019
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Fourth Quarter 2018 Market Commentary

2018 was a challenging year for investors on many fronts with steep total return declines across the global investible universe. The fourth quarter punctuated a year that will go down in history as one that most investors would likely prefer to forget, with strong risk-off clouds darkening the markets, particularly in December. From the constant torrent of worrisome geopolitical developments to immediate macro risks—such as unresolved trade tensions, and fears of a global slowdown triggered by removal of global central bank-supplied liquidity and waning fiscal stimulus tailwinds—global asset allocators were presented with a remarkably difficult market environment to navigate.
Posted by FEG on January 11, 2019
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Fourth Quarter 2018 Research Review

The fourth quarter marked the reversal of optimistic sentiment and positive market returns. The return of volatility and substantial daily market declines brought risk aversion to the forefront of investors’ minds and spurred a flight-to-quality.
Posted by FEG on December 13, 2018
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November 2018 Research Review

A potential thematic shift rounded out the month of November, as Fed Chairman Jerome Powell’s remarks on interest rates during a speech to The Economic Club of New York represented a "dovish" reversal from previous hawkish sentiment in early-October. What could have sparked this unexpected dovish reversal?
Posted by FEG on December 10, 2018
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FEG Insight: Brexit A Certainty of Uncertainty

In 2016 the British took to the polls, and in a close vote, elected to leave the European Union. More than two years later, the exit is looming, and the full breadth and scope of Brexit’s consequences are still unclear.
Posted by Map { "displayName": "FEG" } on November 26, 2018
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Third Quarter 2018 Private Capital Quarterly Review

With broad market uncertainty rising and questions of an inevitable downturn looming, private equity investors should find comfort in a recent study by authors from Stanford, Harvard, and Northwestern Universities highlighting both the outperformance of and greater downside protection offered by private equity relative to public equity during a crisis.
Posted by FEG on November 15, 2018
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October 2018 Research Review

In the third quarter, the U.S. economy enjoyed broad-based improvement across many key economic data points, the strength of which has helped apply upward pressure to interest rates, inflation levels, and near-term sentiment for tighter monetary policy. The strengthening domestic economy has coincided with growing weakness abroad, likely increasing market dispersion and thus potentially improving the investment opportunity landscape.
Posted by Map { "displayName": "FEG" } on October 16, 2018
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Third Quarter 2018 Market Commentary

After nine years in the current economic expansion—the second longest on record, according to the National Bureau of Economic Research—many investors have begun to question whether this upward trajectory can continue. Perhaps at the expense of key trading partners, domestic economic conditions further strengthened during the third quarter and likely supported recent increases in inflation, with incrementally tighter Federal Reserve (Fed) policy serving as a partial counterbalance.
Posted by FEG on October 11, 2018
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Third Quarter 2018 Research Review

In the third quarter, the U.S. economy enjoyed broad-based improvement across many key economic data points, the strength of which has helped apply upward pressure to interest rates, inflation levels, and near-term sentiment for tighter monetary policy. The strengthening domestic economy has coincided with growing weakness abroad, likely increasing market dispersion and thus potentially improving the investment opportunity landscape.
Posted by FEG on September 17, 2018
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August 2018 Research Review

After briefly dipping into deflationary territory in 2015, U.S. inflation rates have since accelerated, with some measures reflecting the most robust inflationary backdrop since the economy was in the early recovery stages of the deflationary grips of the Global Financial Crisis (GFC).
Posted by FEG on August 31, 2018
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FEG Insight: Micro on Macro

In the face of recent performance challenges, many investors are left questioning the ongoing merits of a global macro allocation. Nearly a decade of unprecedented, global monetary easing has driven interest rates and volatility lower–providing limited trading opportunities for macro managers. As market conditions begin to show signs of change, this may create fertile trading ground for macro strategies.
Posted by Map { "displayName": "FEG" } on August 21, 2018
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Second Quarter 2018 Private Capital Quarterly Review

Following a calendar year in which public market returns were positive across almost every asset class—an unusual event—the first quarter saw modest declines across the board. Arguably by virtue of their sticky valuation processes, private markets remained positive across asset classes in first quarter of 2018. The distressed and resources sectors were the lowest returning strategies. Distressed strategies suffered from a lack of distress and resources were impacted by uncertainty in the energy market and other commodity markets, largely caused by political and regulatory factors.
Posted by FEG on August 21, 2018
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July 2018 Research Review

U.S. gross domestic product (GDP) increased 4.1% in the second quarter, the strongest quarterly growth rate since late-2014. With year-over-year growth near 3%, the anticipated positive effects of recently-introduced fiscal stimulus appear to be taking root, leading many to speculate whether the momentum can persist. In July, most risk sectors witnessed positive returns, with notably strong performance generated across domestic equities and more modest returns emanating from international equity markets.
Posted by FEG on July 18, 2018
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Second Quarter 2018 Research Review

The slope of the U.S. Treasury yield curve, often used as recessionary early warning signal, flattened to a new cycle low to round out the second quarter. Key drivers behind this dynamic include the potential full maturity of the economic expansion, continued Fed tightening, and fears of a trade war-induced global growth slowdown. In the second quarter, domestic equities—particularly small cap—generated solid returns while international developed and emerging market equities lost traction.
Posted by Map { "displayName": "FEG" } on July 13, 2018
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Second Quarter 2018 Market Commentary

Following a first quarter spike in volatility, global market participants faced a multitude of risks in the second quarter. Central to these risks were heightened concerns of global trade wars, strong appreciation of the U.S. dollar (particularly versus emerging market currencies), diverging economic health between the U.S. and its largest trading partners, and continued efforts by developed market central banks to normalize monetary policy.
Posted by FEG on June 25, 2018
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Private Investing and the J-Curve

One could take several months, or even years, to become completely comfortable with a swing change in golf, and completing the construction of a private equity program can take even longer. This is a true test of patience and commitment. For investors that are new to private strategies, here is a brief summary of the headwinds the strategy produces in the first few years of development.
Posted by FEG on June 15, 2018
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May 2018 Research Review

As domestic economic fundamentals continued to strengthen in May, improving U.S. conditions appear to be diverging from the euro zone and Japan. Equity market returns corroborated recent fundamental disparities, while a flight-to-quality environment led to solid returns across the higher quality spectrum of the fixed income market. Energy infrastructure assets also continued to post strong performance following April’s impressive gain.
Posted by Map { "displayName": "FEG" } on June 4, 2018
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Dallas Investment Symposium Event Highlights

FEG welcomed more than 100 guests to the George W. Bush Presidential Center in Dallas, Texas on May 8 for a day of education, learning, and networking. This was our second such event in Dallas (tenth, if you consider the history of LT&A) and we were pleased to have an outstanding group of speakers share with us their perspectives on a wide range of macroeconomic and investment topics.
Posted by FEG on May 14, 2018
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April 2018 Research Review

February served as a reminder to investors that what goes up must come down. The spike in U.S. Treasury rates, as well as the early-February short squeeze in levered short-volatility strategies pressured markets despite ongoing indications that underlying economic fundamentals remain relatively healthy.
Posted by FEG on April 13, 2018
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First Quarter 2018 Research Review

Trade war fears, rising U.S. Treasury rates, and a disorderly unwinding of levered short-volatility equity positions helped drive an increase in market volatility in the first quarter. While most major equity indices experienced a strong start to the year, by late-January, that positive momentum began to fade.
Posted by FEG on March 13, 2018
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February 2018 Research Review

February served as a reminder to investors that what goes up must come down. The spike in U.S. Treasury rates, as well as the early-February short squeeze in levered short-volatility strategies pressured markets despite ongoing indications that underlying economic fundamentals remain relatively healthy.
Posted by FEG on February 16, 2018
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January 2018 Research Review

The start of the year witnessed a continuation of many of the dominant economic themes from 2017, including firming fundamentals, a flattening Treasury yield curve, ongoing labor market improvement, a weakening U.S. dollar, and increasing inflation expectations. Across the major asset categories, risk in general was rewarded during the month as global equities pushed higher, with impressive returns abroad and in domestic markets.
Posted by Map { "displayName": "FEG" } on February 2, 2018
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FEG Insight: Eat, Drink, and Be Merry!

The phrase “eat, drink, and be merry for tomorrow we die” has been used throughout literature for centuries, and is generally understood to mean we should enjoy our life as much as possible because we will not live forever. This 2018 Credit Market Outlook aims to help readers understand if there is still some life left in the credit market party or whether it might be time to call it a night. Click here to read.