October-November 2020
COVID-19 Challenges Investment Portfolios
In recent years, global equities had slightly outpaced market forecasts for lower equity returns. Then the COVID-19 pandemic hit the global economy, putting an end to the 10-year bull market. Equity markets have now started to recover, but the pandemic introduced and exacerbated challenges that we expect to subdue financial market returns over the next five years. Here is Northern Trust's five-year annualized return forecasts.

Identifying Drivers is Important Step in Pinpointing Undervalued Companies
We believe it can be dangerous to be overly reliant on thematics when positioning portfolios. Yet as growth investors, we are always looking for companies that are tied to supportive long-term structural drivers.

Identifying these drivers is an important step toward pinpointing the undervalued companies with superior quality and growth characteristics—and we see a number of these investable themes today in emerging markets.

Economic Activity Continues Track to 
Quick but Incomplete Recovery
With the third quarter now in the books, US economic activity continues to track our expected trajectory of a quick but incomplete recovery that over time will give way to a more gradual, lengthy path back to “normal.” But many variables can still influence the outcome.

Follow Basic Principles to
Weather Current Uncertainty
As institutional investors, our typical recommendation is to stick with the following basic principles, many of which should be detailed in your investment policy statement. We believe these timeless tools are effective considerations for not only weathering the current uncertainty, but also helping to better position portfolios for future potential success.

Growing Opportunities Support Development and Maintenance of Affordable Housing Properties
Institutional investors with a focus on environmental, social, and governance (ESG) investing can help address the housing crisis through investment opportunities in both the public and private markets.

High-quality and Low-quality Companies Diverging within Small-cap Space
There is a growing divide between the haves and have-nots in the U.S. small-cap market, thanks to low interest rates and aggressive monetary stimulus that have made it easier for unprofitable companies to sustain their operations longer than they potentially could have in previous market cycles.

Investment Indices: The Inside Story
It’s unusual for investment indices to make the news except during record-breaking highs or lows. However, over the past few weeks, there has been quite a bit of fanfare over changes in two of the most widely known benchmarks for the U.S. stock market.

What Are People Doing at Home? Watching Netflix, Riding Peloton, Eating Beyond Meat Burgers and ... Trading Stocks!
In the U.S., retail trading platforms like Robinhood, Schwab and E-Trade have recorded blockbuster volume growth as people staying home now have a glut of time and are using it to trade stocks. 

3 Pitfalls in Investing in Emerging Markets
PanAgora’s Stock Selector Equity team seeks to understand companies by using quantitative techniques and unique data sets to systematically analyze stocks. PanAgora has developed proprietary quantitative models that serve to analyze a company’s strengths for nearly 25 years, initially managing U.S. equities then expanding into global equities, including emerging markets (EM).

Do Investors Care Who Wins the Election?
Regardless of which candidate wins the 2020 election, the incoming president will be confronted with a litany of pressing pandemic-related, economic, social, and geopolitical challenges. Each of the challenges is likely to have some impact on the future performance of major U.S. capital market indices.

Making Sense of the Current
Growth vs. Value Dynamic
Many investors seem concerned that the current era of growth style dominance will come to the same untimely end as its 1990s predecessor. However, we think there are distinctions in the factors that have driven the current outperformance of growth vs. value, which could result in this cycle playing out differently than the prior one. Here’s why.

Where Can Pension Funds Find
Value Across Real Estate?
As pension funds seek out opportunity in light of COVID-19, it’s crucial to understand the pandemic’s effects across real estate. While some asset classes have remained steady, and even thrived during the pandemic, others have experienced extreme volatility. Those that are on shaky ground were struggling pre-COVID, and the residual effects of the pandemic have only expediated their downfall.

Commercial Mortgage Loans:
An Under-appreciated Private Debt Opportunity
Institutional investors’ ability to meet their fixed income performance goals has been seriously downgraded by the COVID-19 pandemic and global economic shutdown. Historically low pre- pandemic rates are now lower for longer while credit outlooks have weakened.

Global Mining:
A New Era and Renewed Relevance
Having been so recently annealed in the “fire” of COVID-19, we believe the global metals and mining sector is now entering a nearly unprecedented new era. 

TEXPERS | 713-622-8018 | texpers@texpers.org | www.texpers.org
About Us 
The Texas Association of Public Employee Retirement Systems (TEXPERS) is a statewide voluntary nonprofit association that provides education and legislative advisory services to the trustees, administrators, professional service providers and employee groups that manage the retirement money of police, firefighters, municipal and district employees in cities across Texas.