Retirement Tier

Retirement Tier

June 2019

This Rocaton Insights explores the emerging concept of a “Retirement Tier” for Defined Contribution plans. Many Defined Contribution plan investment menus and service offerings were designed primarily around the accumulation phase. In recent years, many product development efforts have targeted the so-called decumulation phase, for investors nearing or in retirement who are planning for their future spending needs. Some of these innovative efforts have had limited adoption, particularly among larger plan sponsors. Industry discussions are again focusing on the decumulation phase and the concept of a Retirement Tier, which features a menu of products and services focused on retirement income planning and management.

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Mid Year Outlook

June 2019

At the end of 2018, we described several themes which we believed would be important topics for investors in 2019 in our Insight title “2019 Capital Market Outlook.” As we near the halfway point of the year, we thought it would be useful to provide an update on those themes. In this paper we will also touch on one new theme which we believe is relevant for the remainder of the year.

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Alternative Credit

February 2019

Illiquid credit investments have become a more prominent feature in the portfolios of many plan sponsors and other investors in recent years. This has attracted meaningful volumes of capital into a variety of illiquid credit-oriented strategies. We believe that investors should continue to consider alternative credit to seek premium returns with less downside risk than the equity market. This Insights seeks to outline key attributes of this philosophy which may guide the selection of such strategies.

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2019 CAPITAL MARKET OUTLOOK

December 2018

Our annual Capital Market Outlook provides a look ahead to 2019 and provides a review of our themes from this past year.

 

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Declining Quality of the Long Corporate Credit Universe : Implications for Plan Sponsors

November 2018

Long BBB-rated corporate credit has steadily increased in absolute and relative terms since the Financial Crisis, and now comprises 50% of the Bloomberg Barclays Long Corporate Index (Long Corporate Index), up from 38% in 2008. Many investors, particularly plan sponsors with a liability that is discounted by higher quality corporate bonds, should consider the implications of this decline in credit quality. This Insights examines the efficacy of including long BBB rated corporate bonds as part of the liability hedging opportunity set and offer suggestions for those concerned with the downward trend in quality and the inherent concentration risks posed by selecting a long corporate benchmark.

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GICS Changes: Introduction of the Communication Services Sector

October 2018
On September 28th the Global Industry Classification Standard (“GICS”) underwent a major structural change. The result of the change is the broadening and renaming of the Telecommunication Services sector, which is now known as Communication Services. The change is meant to acknowledge that the way people communicate, share information and entertain themselves has fundamentally changed, as a result of the convergence of technology, media and telecom. Our Rocaton Insights: GICS Changes: Introduction of the Communication Services Sector provides additional detail on this change and outlines potential implications for public equity portfolios.
 
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Implications of a Flat Yield Curve

September 2018
We are now at a point in which investors are receiving only modest compensation for moving further out on the Treasury yield curve. As the Federal Reserve continues to increase short-term interest rates, there is also the potential for the curve to invert. Regardless of the investor, we believe understanding the implications of holding fixed income at different points along the curve is critical given the range of investor objectives, the shape of the yield curve and the potentially disparate diversification benefits. Our Rocaton Insights: Implications of a Flat Yield Curve provides historical perspective on the shape of the yield curve and outlines potential strategies for different investor types.
 
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2018 CAPITAL MARKET OUTLOOK MID-YEAR UPDATE

June 2018

At the end of 2017, we described several themes which we believed would be important topics for investors in 2018 in our Insight title “2018 Capital Market Outlook.” As we near the halfway point of the year, we thought it would be useful to provide an update on those themes. In this paper we will also touch on two new themes which we believe are relevant for the remainder of the year.
 
 

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Constructing a Glide Path for Defined Benefit

June 2018

A glide path, in the context of a defined benefit pension plan, seeks to identify how a plan’s asset allocation will evolve over time as the plan’s funded status improves. The linked Insights outlines Rocaton’s principals for constructing a glide path. For those plan sponsors that have not yet embraced the concept of a glide path, but are contemplating implementing one, and for plans with an existing glide path, we feel that the these principles may serve as a helpful guide.

 

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The Case for Midstream Energy Equities

May 2018

MLPs (as well as other midstream companies structured as C-Corps), own, maintain and operate most of the energy infrastructure in North America. As oil prices declined sharply between late 2014 and early 2016, MLP and midstream equity prices also fell meaningfully. Despite a recent recovery in oil prices, the midstream energy sector has continued to fall. The linked Insights provides an overview of the midstream energy space, presents the case for making a near-term allocation, discusses potential risks and covers the potential implementation options for different investor types.

 

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