Our Library

Our reports, articles, guides, and press releases. All in one place.

The key to successful long-term investing is managing risk. Liquid alternatives are a meaningful tool for the investor to access a hedge fund’s return profile. Accessibility to hedge funds is a paramount concern for investors, particularly in an environment of low interest rates and highly correlated equity markets. The investment process is long, arduous, and requires experienced professionals using sophisticated analytical tools to ensure value to the portfolio. Liquid alternatives overcome these barriers for the investor.

Liquid Alternatives: A Primer

The key to successful long-term investing is managing risk. Liquid alternatives are a meaningful tool for the investor to access a hedge fund’s return profile. Accessibility to hedge funds is a paramount concern for investors, particularly in an environment of low interest rates and highly correlated equity markets. The investment process is long, arduous, and requires experienced professionals using sophisticated analytical tools to ensure value to the portfolio. Liquid alternatives overcome these barriers for the investor.

Interest rates in the US are at levels never seen before. Companies gorge on debt as their cost of debt capital declines. Meanwhile, income-focused investors and savers yearn for the security of higher levels. Monetary policy certainly abetted the achievement of these levels. The reality is that another factor is complicit in the conspiracy to lower interest rates: growth. Before the yield suppression of the 1940s and the inflationary disconnect of the 1970s led them on a different path, real Treasury yields walked with real growth for decades. That relationship returned over the last four decades. Before the Pandemic, the expectation was that the increasing productivity of the Millennial generation would modestly lift real rates. Without an effective policy response, that outcome is doubtful and could repress real rates for decades. Investors are forewarned that this time is not different.

Interest Rates: A Growth Story

Interest rates in the US are at levels never seen before. Companies gorge on debt as their cost of debt capital declines. Meanwhile, income-focused investors and savers yearn for the security of higher levels. Monetary policy certainly abetted the achievement of these levels. The reality is that another factor is complicit in the conspiracy to lower interest rates: growth. Before the yield suppression of the 1940s and the inflationary disconnect of the 1970s led them on a different path, real Treasury yields walked with real growth for decades. That relationship returned over the last four decades. Before the Pandemic, the expectation was that the increasing productivity of the Millennial generation would modestly lift real rates. Without an effective policy response, that outcome is doubtful and could repress real rates for decades. Investors are forewarned that this time is not different.

Monetary policy is solving one problem and creating another. A reversal of equities may not result in a corresponding increase in credit spreads due to Fed actions. Thus, an equity decline would impair assets with no similar reduction of liabilities. Sponsor beware.

Corporate Pension Strategy 20Q2

Monetary policy is solving one problem and creating another. A reversal of equities may not result in a corresponding increase in credit spreads due to Fed actions. Thus, an equity decline would impair assets with no similar reduction of liabilities. Sponsor beware.

During a period requiring leaders, the US had politicians. Instead of addressing the problem in front of them, their eyes are fixed on the next election and placating their adoring masses. The long-term effect may be a lost generation. The short-term outcome may be needless hardship for those industries that are primarily hit.

A Pandemic Policy Without a Plan

During a period requiring leaders, the US had politicians. Instead of addressing the problem in front of them, their eyes are fixed on the next election and placating their adoring masses. The long-term effect may be a lost generation. The short-term outcome may be needless hardship for those industries that are primarily hit.

A bad opening foretells show cancellation. Australia and Hawaii reveal the threat of early openings even with near eradication of the virus. Leaders face an unequivocal dilemma: limiting travel outside your bubble and gathering inside with the consequential economic impact or accepting the increased deaths and concede the prior economic sacrifice was meaningless. Plaintive politicians know these alternatives are an atrocious trade.

An Opening Act to Repudiate

A bad opening foretells show cancellation. Australia and Hawaii reveal the threat of early openings even with near eradication of the virus. Leaders face an unequivocal dilemma: limiting travel outside your bubble and gathering inside with the consequential economic impact or accepting the increased deaths and concede the prior economic sacrifice was meaningless. Plaintive politicians know these alternatives are an atrocious trade.

Global problems require global solutions. The United States is a pariah for its inability to address the Pandemic. Most of the world fought COVID19 as if their societies’ very fate rested on it and won a reprieve from the virulent effects. The US dithered and legendary leadership failures resulted in little abatement of the deluge. The result is uncertainty for a quarter of the world’s economy that prevents the other three-quarters from engaging consumer number one. The investing implications are profound. Conveniently, an election arrives in November. Whether the US corrects course is debatable until the counting of the final ballot.  Without election and virus certainty, volatility reigns as the malevolent monarch of the markets.

Global Portfolio Strategy - Second Quarter 2020

Global problems require global solutions. The United States is a pariah for its inability to address the Pandemic. Most of the world fought COVID19 as if their societies’ very fate rested on it and won a reprieve from the virulent effects. The US dithered and legendary leadership failures resulted in little abatement of the deluge. The result is uncertainty for a quarter of the world’s economy that prevents the other three-quarters from engaging consumer number one. The investing implications are profound. Conveniently, an election arrives in November. Whether the US corrects course is debatable until the counting of the final ballot. Without election and virus certainty, volatility reigns as the malevolent monarch of the markets.

The first wave is just beginning, not ending. The good news is that the fatality rates appear lower than initially measured.  The bad news is that the US reproduction rate’s current growth would return to the May 1st level by July 4th.

Prelude to Pandemic

The first wave is just beginning, not ending. The good news is that the fatality rates appear lower than initially measured. The bad news is that the US reproduction rate’s current growth would return to the May 1st level by July 4th.

Value investors are asking themselves, will the promise of value investing return to prominence? The answer is multi-faceted. Indeed, value investors experienced under-performance versus the broader market and growth stocks for the last thirteen years.

Requiem for Value Investing

Value investors are asking themselves, will the promise of value investing return to prominence? The answer is multi-faceted. Indeed, value investors experienced under-performance versus the broader market and growth stocks for the last thirteen years.

Change is inevitable. The retail catastrophe occurring now highlights this statement.

The End of Retail

Change is inevitable. The retail catastrophe occurring now highlights this statement.

The US expansion is long in the tooth. The investor needs only ask one question this year: how will
global growth continue?

Global Portfolio Strategy 2020

The US expansion is long in the tooth. The investor needs only ask one question this year: how will
global growth continue?

The story of growth is productivity. Doing more with less. Before one can do more with less, one must learn.

The Productivity Gap

The story of growth is productivity. Doing more with less. Before one can do more with less, one must learn.

The economic environment in the US has a stable consumer and supportive
fiscal policy, which should carry the US economy for the year with government
expenditures supporting. The question is whether investment will rebound or is the decade long expansion ending?

US Economic Outlook 2019

The economic environment in the US has a stable consumer and supportive
fiscal policy, which should carry the US economy for the year with government
expenditures supporting. The question is whether investment will rebound or is the decade long expansion ending?

The economic environment in the US continues to show a stable consumer, rebounding investment, and supportive fiscal policy. The lone detractor from growth is the continuing drag from net exports, but this is merely an accounting identity.

US Economic Outlook 2018

The economic environment in the US continues to show a stable consumer, rebounding investment, and supportive fiscal policy. The lone detractor from growth is the continuing drag from net exports, but this is merely an accounting identity.

There are separate rules
for the funding status as defined by the IRS, and the accounting implications as set by FASB. They can lead to different incentives. Know the difference.

Pension Accounting

There are separate rules
for the funding status as defined by the IRS, and the accounting implications as set by FASB. They can lead to different incentives. Know the difference.

The yield curve and interest rate levels are difficult to forecast in aggregate or individually. Forecasting accuracy is improved when focusing on the factors that describe the term structure and augmenting the models with a market or economic variable.

Yield Curve Modeling

The yield curve and interest rate levels are difficult to forecast in aggregate or individually. Forecasting accuracy is improved when focusing on the factors that describe the term structure and augmenting the models with a market or economic variable.

As much as it is difficult to foresee what technology will change the world a decade from now, it is equally tricky identifying top investment managers in advance. A few key ingredients distinguish an environment that permits success to grow when it arrives.

Manager Research

As much as it is difficult to foresee what technology will change the world a decade from now, it is equally tricky identifying top investment managers in advance. A few key ingredients distinguish an environment that permits success to grow when it arrives.

Multi-factors models are a leading portfolio management tool due to the pioneering work of Fama and French (1992) who showed that more than a single factor explained US equity market returns.

Equity Factor Models

Multi-factors models are a leading portfolio management tool due to the pioneering work of Fama and French (1992) who showed that more than a single factor explained US equity market returns.

Despite a rebound in growth after the Great Recession, an index of commodity prices now stands at the same level as it was in 1975. The natural question is to ask what the role of commodities is,
specifically a commodity total return index, in a diversified portfolio.

Commodities in the Portfolio

Despite a rebound in growth after the Great Recession, an index of commodity prices now stands at the same level as it was in 1975. The natural question is to ask what the role of commodities is,
specifically a commodity total return index, in a diversified portfolio.

The way forward is measured by the degree to which we will listen to scientists and consideration for our neighbors. In essence, we will live a social experiment in real-time with thousands of lives in the balance.

Pandemic Paths

The way forward is measured by the degree to which we will listen to scientists and consideration for our neighbors. In essence, we will live a social experiment in real-time with thousands of lives in the balance.

The economic epidemic is delivering uncertainty to such an extent that the equity markets fell at an unparalleled speed. The economic decline may be greater than the Great Depression and unemployment may reach 30%.

Economic Epidemic

The economic epidemic is delivering uncertainty to such an extent that the equity markets fell at an unparalleled speed. The economic decline may be greater than the Great Depression and unemployment may reach 30%.

San Francisco  |   Los Angeles  |  415-373-7152

 

©2003-2020 Capital Risk Management LLC

 

Capital Risk Management is a Registered Investment Advisor in California and may transact business there and in other states where it is notice filed or exempt.

Please note that although Capital Risk Management LLC is a Registered Investment Adviser, readers should be aware that registration with any state securities authority

does not imply a certain level of skill or training. Additional information about Capital Risk is available on the SEC’s website at www.adviserinfo.sec.gov or

through the Broker Check at FINRA.

Strategy | Investing | Asset Allocation | Liability Driven Investing | Pensions | Endowments | Enterprise Risk Management | Financial Planning | Wealth Management

Disclosures     Terms of Use     Privacy Statement      Form ADV