MarketWatch: The Fed’s first rate cut in 2025 is here. How investors can position their stock portfolios to benefit.
NEPC’s Phillip Nelson was recently quoted in MarketWatch’s coverage of the Federal Reserve’s first rate cut of 2025, sharing insights on how investors can position their portfolios in response. Visit MarketWatch to read the full article.
The countdown is almost over. In a few hours, the Federal Reserve will announce whether it’s finally ready to lower interest rates for the first time in nearly a year, potentially ending a long pause in monetary policy that could steer growth, inflation and financial conditions in the world’s largest economy.
But for financial-market investors, the biggest question is how markets will react once the easing cycle resumes and, more importantly, what it means for their investment portfolios.
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“At least for the last month, the stock market has clearly been buying the rumor of what the Fed is going to do, that a cut will start in September and how many more cuts we will get for the rest of the year, so I don’t think there’s that much exuberance that we’re going to get from anything the Fed does on Wednesday,” said Phillip Nelson, partner and head of asset allocation at NEPC.
“Investors don’t need to make a lot of changes regarding portfolio positioning since we are still waiting for some clarity from the Fed, or for the economy to give a clear indication of the direction it is moving in,” Nelson told MarketWatch in a phone interview on Tuesday.
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“The economic projections from the Fed on Wednesday will give a little more color than they otherwise would in terms of the direction that we might see for small caps,” Nelson said. “But it’s still a tough environment where there are only five to 10 stocks in the U.S. that are really driving the market, so small caps may have to wait in the shadows for a bit longer to have their day, and I don’t see that turning too quickly,” he added.
Click here to continue reading the full MarketWatch article.
WSJ Pro Private Equity Report: Secondary Fundraising Stays Strong in 2025
NEPC’s Josh Beers was recently quoted in The Wall Street Journal’s Pro Private Equity report on the rapid growth of secondary fundraising, where he discussed how larger funds give firms greater flexibility and deal-making power. Visit The WSJ Pro Private Equity Report to read the full article.
Secondary fundraising remains robust in 2025 with many established firms raising much larger capital pools than they did in the past and newcomers making a mark with sizable debut funds.
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Larger funds can give firms more flexibility to pursue bigger deals and the firepower to lead such deals, according to Joshua Beers, a partner at investment consultant NEPC, which advises institutional investors on their portfolios.
“Having a sizable pool of capital puts you in an advantageous position,” he said.
Click here to continue reading the full WSJ Pro Private Equity Report article.
Planadviser: Rapid Growth in CITs Fueled by Small Plan Adoption
NEPC’s Bill Ryan is quoted in this PLANADVISER article discussing the rapid growth of collective investment trusts (CITs)—particularly how small plan adoption is fueling their rise—and why lower fees are a key driver. Visit PLANADVISER to read the full article.
Collective investment trusts now hold nearly 30% of DC plan assets, rising from just 13% a decade ago; experts predict it won’t be long before they overtake mutual funds’ role in the defined contribution market.
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“There are [several] macro factors driving [CIT] adoption,” says Bill Ryan, a partner and defined contribution team leader at NEPC. “No. 1 is lower fees for CITs relative to [fees for] mutual funds.”
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“For a while, mutual fund companies either didn’t have a CIT to provide to small plans, or priced it in a way that you had to have over a certain asset level to access CITs—so that CITs didn’t cannibalize their mutual fund business,” Ryan explains.
He adds that asset managers now prefer CITs because there are fewer cost burdens and less friction associated with the structure. That’s why small plans are catching on, he says.
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Usually, however, problems such as a recordkeeper lacking the right subscription documents for a new CIT or share class can slow down the transition process by “weeks, not months or years,” Ryan says.
“If there was a wrinkle, … it’s akin to what mega plans had 15 or 20 years ago,” he says. “It’s new, it’s different, so you just need to explain that you’re getting the same stocks in both portfolios … you’re just getting different wrapping paper.”
Click here to continue reading the full PLANADVISER article.
Planadviser: The Evolution of the DCIO Sales Model
NEPC’s Bill Ryan is featured in this PLANADVISER article, which explores how DCIO firms are shifting their sales models to focus more on centralized relationships with CIOs and home office decision-makers. Visit PLANADVISER to read the full article.
Investment firms are increasing emphasis on developing relationships with CIOs and others responsible for approved fund lists and 3(38) programs.
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Bill Ryan, a partner in, and DC team leader at, NEPC, says DCIO sales teams seem to have a greater appetite to be creative for the end client because of the centralization.
“There becomes more of a focal point for them to figure out what the scale and leverage [are] versus wider distribution, where you’re more tethered to the off-the-shelf products,” Ryan says. “[The centralization] allows the RIAs and institutional consultants to be more creative with their clients and [devise] maybe more bespoke solutions that they can scale for their client base.”
DCIOs that are successful have a centralized enterprise relationship manager who works with clients’ home office, he adds.
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Ryan says there could be hyper-consolidation among the DCIO firms, with some deciding to retreat from the DCIO space and concentrate on the wealth channel and annual rollovers. But the state of the industry now poses an opportunity for the DCIO sales teams.
“There is an urgency now that I haven’t seen before with the centralized decisionmakers that you can actually effect change,” Ryan says. “I think there’s going to be a tipping point—I don’t know if it’s two or three or five years from now—but the door could close. This is a really exciting window for entrepreneurs in the DCIO sales force to deliver interesting products to DC plans.”
Click here to continue reading the full PLANADVISER article.
PlanSponsor: CITs Expand, Go Smaller
NEPC’s Bill Ryan recently spoke with PLANSPONSOR about the growing adoption of Collective Investment Trusts (CITs), noting how fee transparency and evolving plan design are driving greater accessibility for smaller plans. Read the full article on PLANSPONSOR or read excerpts below.
The retirement security of millions of working Americans is becoming increasingly reliant upon an asset structure that is likely less familiar than its ubiquitous counterpart, but powerful to many.
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“There are [several] macro factors driving [CIT] adoption,” says Bill Ryan, partner and defined contribution team leader at NEPC. “Number one is lower fees for CITs relative to mutual funds.”
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“For a while, mutual fund companies either didn’t have a CIT to provide to small plans, or priced it in a way that you had to have over a certain asset level to access CITs—so that CITs didn’t cannibalize their mutual fund business,” explains NEPC’s Ryan.
He adds that asset managers now prefer CITs because there is less friction and fewer cost burdens associated with the structure. That is why small plans are catching on, he says.
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NEPC’s Ryan adds that usually, however, problems such as a recordkeeper not having the right subscription documents for a new CIT or share class can result in the slowing down the transition process by “weeks, not months or years.”
“If there was a wrinkle … it’s akin to what mega plans had 15 or 20 years ago,” says Ryan. “It’s new, it’s different, so you just need to explain that you’re getting the same stocks in both portfolios … you’re just getting different wrapping paper.”
Click here to read the full article on the PlanSponsor site.
Pensions & Investments: Bond managers face reckoning in 401(k) lineups. Higher-rate environment exposes firms that failed to adapt.
NEPC’s Mikaylee O’Connor is quoted in this Pensions & Investments article exploring 2024 trends in corporate 401(k) plan investment lineup changes, particularly within the fixed-income space. View the full article on Pensions & Investments’ site here or read excerpts below.
More than 100 U.S. corporate 401(k) plans made investment option changes during 2024, with more than a quarter of those making changes to the active core-plus bond funds offered in their lineups.
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Mikaylee O’Connor, principal and head of defined contribution plan solutions at investment consultant NEPC, would not comment on specific funds, but she said there have been more manager challenges recently within the fixed-income space.
“While a lot of these active fixed-income managers can continue to outperform,” said O’Connor, “peer rankings do differ quite substantially within the core-plus space. And so when you’ve got kind of performance challenges, and potential other issues, you can see an increase in search activity.”
Before rates began to rise in 2022, low rates meant low returns across the board for fixed-income managers, O’Connor said.
“The range of difference between your top quartile and your bottom quartile manager for so long was so narrow, and now, as rates have risen, that range of difference in manager performance has increased, which has created a little bit more kind of focus within the fixed-income space,“ she said.
Click here to continue reading the full Pensions & Investments article.
S&P Global: S&P 500 rises over 2% in July to extend summer surge
NEPC’s Phillip Nelson shares his perspective in this S&P Global article examining the S&P 500’s more than 2% rise in July and what it signals for the ongoing summer market rally. Visit S&P Global’s website to read the full article.
The S&P 500 posted a monthly gain for the third time in a row while setting multiple record highs along the way in July.
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“You have a massive secular theme in AI that seems to be generating outsized earning and sales expectations for a large number of companies in the US, and those themes are driving people to maintain their market exposure,” said Philip Nelson, partner and head of asset allocation for institutional investment consulting firm NEPC, in an interview. “And there’s still quite a bit of liquidity that’s leftover in markets from the years of easy US Federal Reserve policy post-financial crisis and then also following the pandemic, so there’s a lot of money that can quickly get deployed.”
Chief Investment Officer: Data, Custom Indexing Reshape Public Equity Portfolios
NEPC’s Nedelina Petkova shares insights with Chief Investment Officer on how data-driven strategies and custom indexing are redefining public equity investing. Read the full article on CIO’s website to learn how these innovations are reshaping portfolio construction.
The growing availability of trading data and information increasingly enables institutional investors and other market participants to improve existing portfolio models and build new ones. Providers and allocators can achieve any desired market exposure by matching sector characteristics and risk factors. This has allowed investors to move beyond traditional performance benchmarks and instead construct portfolios that reflect their unique investment theses.
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“Clients are seeking modular, tailored solutions,” says Nedelina Petkova, a senior investment director at NEPC. “Clients now use custom indexes to either amplify exposure to favored sectors, like artificial intelligence or clean energy, or to exclude sectors like tobacco, gambling or fossil fuels that may conflict with organizational values or regulatory guidelines.”
Click here to read the full article on the Chief Investment Officer site.
Chief Investment Officer: Fixed-Income Benchmarks Become More Customized
NEPC’s Aaron Chastain was recently quoted in Chief Investment Officer discussing the growing demand for customized fixed income benchmarks as institutional investors seek more tailored exposures. View the full article on Chief Investment Officer’s site here.
Fixed-income benchmarks have come a long way from when the Bloomberg U.S. Aggregate Bond Index was the main tool asset managers and asset owners used for performance measurement.
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For complex portfolios, custom benchmarks can be an improvement over traditional indexes, since they can track closer to an asset owner’s targeted hedging portfolio; however, they are not a perfect solution, wrote Aaron Chastain, a principal and the corporate solutions leader at NEPC, in an email.
“A hedge ratio of 100% for interest rates and credit spreads still cannot create a perfect hedge against economic outcomes, demographic outcomes and assumption changes,” Chastain wrote.
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NEPC’s Chastain wrote that advisers who work with clients to build a customized index seek to clearly define stakeholder expectations and constraints to ensure the appropriate focus on results is maintained.
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Not everyone is a fan of customized indexes. Chastain wrote their use is being driven by asset managers looking for business because de-risking and pension risk transfers have reduced the need for liability-driven investment portfolios.
Larger pension fund sponsors with unique needs, as well as significantly de-risked plans that are seeking hibernation for their fund, may benefit from customized benchmarks, but NEPC’s Chastain wrote, “We believe the majority of plans remain well served by a thoughtful implementation of [U.S.] Treasurys and corporate bonds, paired with completion management.”
Click here to read the full article on the Chief Investment Officer site.
Financial Planning: When everybody's a 'family office,' what's the term really mean?
NEPC’s Karen Harding, leader of our Private Wealth team, was recently quoted in Financial Planning exploring the evolving definition of “family office” in today’s wealth management landscape. Read the full article on Financial Planning’s website, or the excerpt below, to learn how industry leaders are navigating the shifting expectations and responsibilities of serving ultra-high-net-worth families.
A cliché in wealth management is “When you’ve seen one family office, you’ve seen one family office.”
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Karen Harding, private wealth team leader at the investment consulting firm NEPC, said one distinguishing trait of true family offices is that they have a fiduciary relationship to their clients. This means they exist solely to further the family’s interests and separates them from, say, private bankers, who may have an incentive from their employers to sell investors certain banking products.
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Another difference arises from origins, Harding said. Historically, single-family offices have been built from the ground up by rich families seeking not only wealth management but also help with the myriad complications that can come with the possession of lots of money.
By contrast, many of the multifamily offices and other wealth management firms now using the family office label started as pure-play wealth managers, Harding said. Only over time have they come to see opportunities in providing a greater array of services to rich families, sometimes by adding to their in-house offerings and sometimes by working with outside partners.
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For wealthy families, the real question is: Is this definition-stretching harmful? In most cases, Harding said, probably not.
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“[Clients are] not necessarily hung up on visiting XYZ private bank, XYZ family office, XYZ wealth management,” Harding said.
“They’re really focused on: What are the needs that I have, and can you meet them? I think as long as they are able to kind of look at what that service offering is and make sure it matches their needs, no harm, no foul, in my mind.”
Click here to continue reading the full Financial Planning article.