commentary

When Investment Management Becomes a Partnership

For insurance companies, investment management does not reside in a vacuum. Each entity faces unique circumstances, and to obtain a favorable investing outcome, an insurance company must identify, understand, and manage all the risks involved. This is done through Enterprise Risk Management (ERM). The list of potential risks is long, and they are all interconnected.

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"Time in the market, not timing the market"

It's a timeless lesson that we're taught at an early age and that advisors preach to their clients regularly. The beauty of this simple lesson is that we have troves of data to show the impact of an equity investor staying fully invested. Specifically, the impact on your total return when you are not invested during the best-performing days and the stock market's sneaky history of recovering following major price declines.

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Inflation and Profitability in the New Economy

U.S. Equity Investor Letter for the Second Quarter of 2022 After hitting an all-time peak on the first trading day of 2022, it’s been all downhill for the S&P 500 index since. In fact, the 19.96% drop through the end of June is the worst first half of a calendar year for the index in over 50 years. Our equity strategies have generally remained true to form during this downturn, with both our flagship Large Cap and Mid Cap strategies losing less than their respective benchmarks in the year-to-date period, though that may be little consolation.

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Macroeconomic Update - April 2022

Investment Perspectives for Insurance Companies. At an industry conference last month, Madison Portfolio Manager Jeff Matthias shared the following macroeconomic update, including the firm’s thoughts on monetary policy, inflation and unemployment, household and business outlook, risk of stagflation and/or recession, and a general outlook for both the economic and credit cycles.

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Market Volatility is Back... With Few Places for Investors to Hide

Fixed Income Perspectives for the First Quarter of 2022 Financial markets experienced one of the most volatile periods in years during the first quarter of 2022, even when compared to the dramatic moves as the Covid-19 shutdown unfolded. Spanning equity, commodity, and bond markets, investors found few places to hide. However, after experiencing this rapid repricing, there are reasons to be optimistic going forward.

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Temporary disruption or seismic shift?

Equity Market Perspectives for the First Quarter of 2022 Over 15 months ago, in one of our year-end letters summarizing 2020, we mentioned how so many events were packed into the year; it felt like we experienced a decade’s worth of macro-economic and geopolitical events in one year, including but not limited to, a pandemic, 1960s-style social unrest, a disputed political contest, and extremely volatile stock markets. To that list, we can now add a war involving a major global power.

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Quantitative Tightening vs. Easing

In the fourth quarter of 2021, with the backdrop of increasing inflation, the Federal Reserve (the “Fed”) began the process of withdrawing its monetary support for the U.S. economy. The most delicate element of the plan is likely to be shrinking its record balance sheet (currently about $9 trillion) – something that ended up roiling financial markets the last time policy makers did it.

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High Quality Fixed Income Investing in Today's Environment

Traditionally, high quality fixed income has played three important roles in an investor’s asset allocation: a steady source of safe income, principal preservation, and risk reduction through diversification. Today, due primarily to massive Government intervention in the credit markets, one of those pillars has been weakened – income.

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