highlights from surveys of investment committees 2016€¦ · trends in asset allocation chart was...

Highlights from Surveys of Investment Committees 2016Trends in Investing

John A. Amirante

MBA, CIMA®, CFP®

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•John Amirante is a registered representative of Lincoln Financial Advisors.

•Securities and advisory services offered through Lincoln Financial Advisors Corp., a

broker/dealer and registered investment advisor. Insurance offered through Lincoln affiliates

and other fine companies. Siller and Cohen is not an affiliate of Lincoln Financial Advisors.

•Lincoln Financial Advisors Corp. and its representatives do not provide legal or tax advice. You

may want to consult a legal or tax advisor regarding any legal or tax information as it relates to

your personal circumstances.

Disclosure

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Institutional Advisory TeamRandy P. Siller

CPA*, MS in Tax, CIMA®1, Partner

T: 914.305.9051

E: [email protected]

Jeffrey S. Cohen

CFP®, Partner

T: 914.305.9052

E: [email protected]

SILLER & COHEN Investment

Committee Member


Committee Member

Yona Klein

CIMA®1

Director of

Investment Services

T: 914.305.9055

E: YKlein@

SillerandCohen.com

Josh Marriott

CFP®, CIMA®1

Director of

Planning Services

T: 914.305.9014

E: JMarriott@

SillerandCohen.com

Richard E. Austin

JD*, LLM, CIMA®1

Director of Financial

Advisory Services

Gregory J. Thompson

JD*, CFP®

Director of Estate &

Advisory Services

T: 914.305.9053

E: GThompson@

SillerandCohen.com

Freddie DiFranco

MS in Finance

Investment Operations

Associate

T: 914.305.9059

E: FDiFranco@

SillerandCohen.com

Bardha Mitaj

MBA in Financial Management

Investment Operations &

Modeling Coordinator

T: 914.305.9056

E: BMitaj@

SillerandCohen.com

Nasser Ali

CFA, CAIA, CFP®,

CRPC®, AAMS, CMFC

Co-Chief Investment

Officer

Robert E. Appel

JD*, LLM, MBA

National Design /

Advanced Planning

Our Sagemark Consulting

National Advisory Team:

John A. Amirante

MBA, CFP®, CIMA®1

Director of

Philanthropic Services

T: 914.305.9058

E: JAmirante@

SillerandCohen.com


Committee Member

Ryan Harding

Investment Operations

Associate

T: 914.305.9073

E: RHarding@

SillerandCohen.com


Committee Member


Committee Member


Committee Member

1. CIMA®: CERTIFIED INVESTMENT MANAGEMENT ANALYST CRN-1495814-050916

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For 11 consecutive years Barron’s Magazine has

recognized a member of SILLER & COHEN as being among

the top advisors in the nation.1

1. This list was complied by RJ Shook, Financial Industry Consultants. This is an objective ranking based on assets under management, revenue, profit, and indications of services.

Recognized by Barron’s Magazine…

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Current Trends in Endowment Management

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Impact Investing on the Rise

Charts taken from Endowment and Foundation 1st Quarter Results At-A-Glance: An Impact Investing Infographic CRN-1495814-050916

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Among those who have implemented Impact Investing

Programs:

Chart taken from Endowment and Foundation 1st Quarter Results At-A-Glance: An Impact Investing Infographic CRN-1495814-050916

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What is the focus of your impact investment strategy?

Chart was taken from NEPC Q1 2016 Endowment and Foundation Market Survey CRN-1495814-050916

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What were the drivers that led you to add impact exposure to your portfolio?


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Do you implement your strategy at the overall portfolio level or within specific asset classes?

Chart was taken from NEPC Q1 2016 Endowment and Foundation Market Survey CRN-1495814-050916 CRN-1495814-050916

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What would need to occur for your organization to potentially consider impact related investing?


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Current Thoughts on the Markets

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Which of the following poses the greatest threat to your investment performance over the near term?


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Global Economy

Chart was taken from NEPC Endowment and Foundation 4th Quarter Results At - A – Glance Market Survey CRN-1495814-050916

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Emerging Markets


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Trends in Asset Allocation


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Rate Increase Expectations


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Energy as a Portfolio Component


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Which Track Record Would You Prefer?

January 1, 1987 – December 31, 2015

*Best Calendar Years: Portfolio A = 1987, Portfolio B = 1995, Portfolio C = 1995, Portfolio D = 1995, Portfolio E = 1995. **Worst Calendar Years: Portfolio A = 2009, Portfolio B = 2008, Portfolio C = 2009 & 2013, Portfolio D =

2008, Portfolio E = 1994. See next slide for portfolio specific information. Past performance is not a guarantee of future results. Index performance is not illustrative of fund performance. One cannot invest directly in an

index.

Portfolio A Portfolio B Portfolio C Portfolio D Portfolio E

Average Annual Return 8.1% 10.1% 8.1% 9.6% 9.3%

Annual Volatility 9.9% 15.2% 9.8% 8.7% 6.9%

Best Calendar Year* 58% 38% 31% 34% 27%

Worst Calendar Year** -5% -37% -13% -10% -3%

Number of Down Years 5 5 7 4 3

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Managed Futures Index Stocks BondsStocks &

Bonds

Stocks,

Bonds & Managed

Futures

100% 100% 100% 50%50%33% 33%

33%

January 1, 1987 – December 31, 2015

Portfolio A Portfolio B Portfolio C Portfolio D Portfolio E

Average Annual Return 8.1% 10.1% 8.1% 9.6% 9.3%

Annual Volatility 9.9% 15.2% 9.8% 8.7% 6.9%

Best Calendar Year 58% 38% 31% 34% 27%

Worst Calendar Year -5% -37% -13% -10% -3%

Number of Down Years 5 5 7 4 3

Managed Futures refers to the Barclay

BTOP50 Index. Stocks refers to the S&P 500

Index. Bonds refers to the Barclays Long

Term Treasury Index.

Portfolio A is 100% Managed Futures represented by the Barclays BTOP50 Index. Portfolio B is 100% Stocks represented by the S&P 500 Index. Portfolio C is 100% Bonds represented by the Barclays Long Term Treasury

Index. Portfolio D is 50% Stocks (S&P 500 Index) and 50% Bonds (Barclays Long Term Treasury Index). Portfolio E is 33.3% Stocks (S&P 500 Index), 33.3% Bonds (Barclays Long Term Treasury Index), and 33.3% Managed

Futures (Barclays BTOP50 Index). Past performance is not a guarantee of future results. Index performance is not illustrative of fund performance. One cannot invest directly in an index.

Which Track Record Would You Prefer?

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We are going to live with it for a while

0

10

20

30

40

50

60

70

80

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Source: FactSet, John Hancock Investments, as of 2015. It is not possible to invest directly in an index. Past performance does not guarantee future results.

S&P 500 Index, 1950 through 2015 (trading days per year with greater than +/–2% returns)

Korean War beginsKorean War begins

Soviets launch SputnikSoviets launch Sputnik

Warsaw Pact signedWarsaw Pact signed

Cuban missile crisisCuban missile crisis

Vietnam War escalatesVietnam War escalates

President Kennedy assassinatedPresident Kennedy assassinated

Oil crisisOil crisis

Iran hostage crisisIran hostage crisis

President Nixon resignsPresident Nixon resigns

Unemployment hits 10%Unemployment hits 10%

Asian currency crisisAsian currency crisis

Black Monday stock market crashBlack Monday stock market crash

Long-Term Capital Management collapse,

President Clinton impeached

Long-Term Capital Management collapse,

President Clinton impeached

Tech bubble burstsTech bubble bursts

Enron, WorldCom bankruptciesEnron, WorldCom bankruptcies

September 11 terrorist attacksSeptember 11 terrorist attacks

European sovereigndebt crisis begins

European sovereigndebt crisis begins

U.S. debtdowngraded

U.S. debtdowngraded

RECESSION

7/53–5/54

RECESSION

8/57–4/58

RECESSION

4/60–2/61

RECESSION

1/80–7/80

RECESSION

7/81–11/82

RECESSION

12/69–11/70

RECESSION

11/73–3/75

RECESSION

7/90–3/91

RECESSION

3/01–11/01

RECESSION

12/07–6/09

Lehman Brothers bankruptcyLehman Brothers bankruptcy

The level of stock market volatility in recent years is unprecedented

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A traditional asset mix was no match for it in 2008

Total returns by asset class (2008)

Emergingmarkets

Int’lsmallcap

Globalreal estate

Naturalresources

Int’lstocks

U.S.real

estate

U.S.stocks

Bankloans

High-yield

bonds

TIPS

U.S.bonds

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

Source: FactSet, as of 2015. Diversification does not guarantee a profit and or eliminate the risk of a loss. CRN-1495814-050916

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A traditional asset mix was no match for it in 2008

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Growth of $100,000 (12/31/99–12/31/15)

Diversified alternatives portfolioAnnual

total return

Standard

deviationCorrelation

Since the beginning of 2000, a diversified

portfolio of alternative investments would have outperformed the

S&P 500 Index with less volatility.

6.94% 8.25% 0.76

S&P 500 IndexAnnual

total return

Standard

deviationCorrelation

Stocks have been quite volatile during the

past 15 plus years—with only modest returns.4.08% 15.13% 1.00

Global REITs

Emerging-market bonds

Relative value

Emerging-market stocks

Gold

Macro strategies

Merger arbitrage

Commodities

Market neutral

Source: Morningstar Direct, as of 12/31/15. The diversified alternatives portfolio is represented by an equal-weighted blend of all nine alternative categories shown in the chart. It is not possible to invest directly in an index. Diversification does not guarantee a profit or eliminate the risk of a loss. Standard deviation measures performance fluctuation, may not be indicative of future risk, and is not a predictor of returns. Correlation is a statistical measure that describes how investments move in relation to each other, which ranges from –1.00 to 1.00. The closer the number is to 1.00 or –1.00, the more closely the two investments are related. The chart is for illustrative purposes only .Past performance does not guarantee future results. CRN-1495814-050916

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The benefits of being “different”

Many alternative assets and strategies have shown low correlation to stocks

Global REITsReal estate investment trusts that typically own and operate

income-producing property0.62

Emerging-market bondsDebt securities issued by developing countries, frequently with different

economic drivers and rates of inflation than developed nations0.51

Relative valueA strategy predicated on realization of a valuation discrepancy in the

relationship between multiple securities0.58

Emerging-market stocksStocks of nations experiencing rapid growth and industrialization,

often with a nascent but growing middle class0.77

Gold A commodity traditionally used as a store of value and a hedge against inflation 0.04

Macro strategiesTop-down strategies in which the investment process is predicated on

movements in underlying economic variables0.19

Merger arbitrageA strategy focused on securities of companies that are engaged

in a corporate transaction0.55

Commodities Markets where contracts for raw materials such as wheat are exchanged 0.31

Market neutral An investment strategy that hedges out specific market risks 0.25

Source: Morningstar Direct, as of 12/31/15. It is not possible to invest directly in an index. Diversification does not guarantee a profit or eliminate the risk of a loss. Past performance does not guarantee future results. CRN-1495814-050916

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The average university endowment had a 58% allocation to alternative investments in 2014

Endowment asset allocation in 2014

58% Alternative strategies

17% International equities

13% Domestic equities

7% Fixed income5% Short-term securities

Survey of 831 universities

What institutional investors have known for some time

Manage volatility

Make their annual payouts to retirees

Build assets

Defined benefit plans, university endowments, and other institutional investors have used alternatives for years as a way to help:

Source: National Association of College and University Business Officers, 2014. CRN-1495814-050916

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Annualized return 4.90% 5.51%

Sharpe ratio¹ 0.37 0.47

Standard deviation2 9.07% 8.27%

Ending value of $100,000 invested

1/00 through 12/15 $215,019 $235,983

60%

40%

Adding alternatives can help dampen portfolio volatility

Traditional portfolio plus alternativesTraditional portfolio

Stocks

Bonds

Diversified alternatives

45%

30%

25%

A portfolio that included alternatives produced higher risk-adjusted returns

Source: FactSet, Morningstar Direct, as of 12/31/15. Diversified alternatives is represented by an equal-weighted blend of all nine alternative categories . It is not possible to invest directly in an index. Performance figures assume reinvestment of dividends and capital gains. This chart is for illustrative purposes only and does not represent the performance of any John Hancock fund. Diversification does not guarantee a profit or eliminate the risk of a loss. Past performance does not guarantee future results.

1 Sharpe ratio is a measure of excess return per unit of risk, as defined by standard deviation. A higher Sharpe ratio suggests better risk-adjusted performance. 2 Standard deviation measures performance fluctuation—generally, the higher the standard deviation, the greater the expected volatility. CRN-1495814-050916

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Source: Morningstar Direct, as of 3/31/16. Precious metals are represented by the Morningstar Precious Metals Index, a fully collateralized precious metals futures index that is long on all eligible precious metals. Buy/write is represented by the CBOE S&P 500 Buy Write Index (BXM), a

benchmark designed to track the performance of a hypothetical buy/write strategy on the S&P 500 Index. Market neutral is represented by the Morningstar U.S. open-end market neutral fund category, a collection of funds that attempts to reduce systematic risk created by factors such

as exposures to sectors, market cap ranges, investment styles, currencies, and/or countries; the funds try to achieve this by matching short positions within each area against long positions, and these strategies are often managed as beta neutral, dollar neutral, or sector neutral.

Commodities are represented by the Morningstar Long-Only Commodity Trust Index, a fully collateralized commodity futures index that is long on all eligible commodities. Global real estate is represented by the Morningstar World Real Estate Index, which consists of mortgage

companies, property management companies, and real estate investment trusts. Long/short equity is represented by the Morningstar U.S. open-end long/short equity fund category, a collection of funds that holds sizable stakes in both long and short positions in equities and related

derivatives; some funds that fall into this category will shift their net long or short exposures depending on their managers’ macro outlook or the opportunities they uncover through bottom-up research. Multicurrency is represented by the Morningstar U.S. open-end multicurrency fund

category, a collection of funds that invests in instruments of foreign exchange. Diversified alternatives are represented by an equal weighting of the seven indexes shown in the table. It is not possible to invest directly in an index. Performance figures assume reinvestment of dividends

and capital gains. Standard deviation measures performance fluctuation, may not be indicative of future risk, and is not a predictor of returns. Sharpe ratio is a measure of excess return per unit of risk, as defined by standard deviation. A higher Sharpe ratio suggests better risk-adjusted

performance. This chart is for illustrative purposes only and does not represent the performance of any John Hancock fund. Past performance does not guarantee future results.

Diversification does not guarantee a profit or eliminate the risk of a loss. CRN-1495814-050916

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QUESTIONS?

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THANK YOU

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highlights from surveys of investment committees 2016€¦ · trends in asset allocation chart was...

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