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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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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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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The State of the Hedge Fund Industry

September 2017

Post-financial crisis, hedge fund strategies have faced increased scrutiny and negative press due to high fees and poor performance relative to public markets.  While some high-profile firms have closed and some institutional investors have reduced or abandoned hedge funds, hedge fund strategies still play a role in some investor portfolios.  The attached Insights reviews the current state of the hedge fund industry and provides more detail on our preferred approach to using hedge fund strategies within investor portfolios.


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Energy Market Opportunities

March 2016
The decline in energy markets over the past 18 months has been dramatic with crude oil prices falling 70% and natural gas prices falling 60%. When a market experiences a severe correction, we believe it is appropriate to look for attractive investing opportunities in that market. Some of the areas which we believe present attractive opportunities today include private energy investments and midstream energy debt. To be clear, these opportunities do not rely on a significant rise in energy spot prices to generate attractive returns. The balance of this paper details our views on the following energy investment opportunities, Long-Biased Energy Futures, Energy Public Debt, Energy Public Equities, Master Limited Partnership Equity, Master Limited Partnership Debt, and Private Energy Partnerships.


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Building a Better Inflation Hedge: The Case for Real Assets

March 2014
After witnessing the U.S. equity market rally more than 32% in 2013 and experiencing the first negative calendar year for core U.S. fixed income since 1999, investors may find themselves questioning the prospects for returns in traditional stock and bond markets going forward. In addition, continued quantitative easing from central banks around the world has many market pundits predicting the return of inflation in the not too distant future. As we outlined in a recent Rocaton Insights (The Outlook for Treasury Inflation Protected Securities, November 2013), inflation linked bonds may not provide the inflation hedge that many investors are expecting. In this Rocaton Insights we discuss potential opportunities in real assets while also outlining various considerations for these asset classes.


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The European Distressed Opportunity

December 2013
For several years, the European debt crisis has inflicted unprecedented stresses on the Continent’s economic and financial systems.  Yet, while investment strategies oriented towards distressed European credit and real estate have been available throughout this period, broad-based buying opportunities have largely failed to materialize until recently.  Now, as conditions have begun to stabilize, significant deleveraging of the European financial system has begun in earnest.  In this Rocaton Insights we will explore the reasons why the time may be right for investors to consider investments in European distressed credit and real estate, as well as key implementation considerations for such strategies.


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End of the Commodities “Super Cycle”?

August 2013
Investors allocating to commodities have often cited diversification benefits and inflation hedging properties as two of the primary attributes which make the asset class compelling. While Rocaton still believes a portfolio of commodities can provide these benefits, we are concerned about the prospects for returns in the near- and medium-term. In the attached Rocaton Insights, we review current supply/demand dynamics and discuss our outlook for the asset class.


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Returns Wanted! Opportunities in Private Middle Market Lending

June 2013
Four years after the turmoil of the 2008 credit crisis, continued political and economic malaise has forced monetary policymakers to prolong and enhance their stimulus of capital markets. Yet, as successive waves of monetary stimulus have caused market participants across the board to pursue risky assets in pursuit of yield, a specific set of structural forces at work in the market for corporate credit has caused a bifurcation in the cost of capital for large versus small and medium sized creditors. Currently, the cost of credit for small and medium sized corporate borrowers in the private market is up to 4-5% higher than for large issuers of comparable credit quality issuing publicly traded bonds. For investors with an ability to accept illiquidity, strategies designed to capitalize on this lending opportunity offer an attractive premium over public bond markets. In this paper, we will lay out the options available for investors seeking to participate in private middle market lending. We then turn to a brief exploration of the forces that have created these conditions and why they are likely to persist for some time.


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