News & Publications

On "Passive" Investing

January 2019

The nub of this note is telegraphed by its title, with passive surrounded by quotes to underscore the fact that all investment strategies, even and indeed especially ultra-diversified ones, entail the exercise of human judgment. How so? Because no one has assembled or indeed could assemble a portfolio comprising fractional interests in all investable assets — not without making crucial judgments about which assets to include, in what weights, and not without somehow compelling pre-existing owners of non-marketable assets to sell slices of them to complete the exercise. Of course, no sensible investor would want to hold a truly comprehensive basket of investable assets, especially one constructed in accordance with the most widely followed rule for “passive” portfolio construction circa 2019, namely capitalization weighting. read more ❯

Q4
2018

Our View

January 2019

Equity markets declined sharply in the fourth quarter ending the year in negative territory globally. While it is difficult to pinpoint a single factor that caused the market reversal, the culprits were concerns about rising interest rates, geo-political uncertainties such as Brexit, trade war escalation and increased concern about the possibility of a material policy mistake. While there is a universal abhorrence for negative returns, the quarter was made more tolerable as New Providence had positioned portfolios to be underweight equities and other risk assets. In addition, volatility creates silver linings amidst the storm clouds, especially for the patient investor with a long-term perspective. read more ❯

International Series: The Base Case for China

November 2018

We believe that the Chinese stock markets represent an attractive investment universe for active equity managers. read more ❯

Current View on U.S. Corporate Credit Opportunity

November 2018

High Yield corporate credit is currently unattractive in our view. We outline our rationale for limiting exposure to this asset class in the following slides. read more ❯

Q3
2018

Our View

October 2018

U.S. equities performed well in the third quarter +7.7% (see Table 1), significantly outperforming all other geographic areas, particularly Asia ex-Japan, which declined 1.5% for the quarter, a continuation of a divergence trend that we saw emerge in the middle of the second quarter. Exposure to U.S. equities remains the largest geographic allocation in client portfolios but an area where we have been trimming exposure on market strength. While we did not make substantial changes to portfolio allocations in the third quarter, our bias today is that the next portfolio move is likely to be to further trim exposure to equities as the current cycle ages. read more ❯

Q2
2018

Our View

July 2018

The second quarter was characterized by continued uncertainty and market turbulence as investors grappled with strong corporate earnings offset by increased macro and political risks. Consequently, global equity markets showed mixed performance with the S&P 500 generating a positive return (+3.4%), while non-US developed market equities declined (-1.2%) and emerging markets receded (-8.0%)1. From our perspective, the outlook for equities has deteriorated somewhat for several reasons, outlined below. read more ❯

A Candid Coversation

2018

The work done at money management firms comprises typically three main functions: (1) Investing (obviously!); (2) Outreach (i.e., interacting with existing and prospective clients); and (3) for lack of a better term, Other (i.e., accounting, audit, compliance, HR, IT, and myriad important additional tasks that money management firms must do well in order to succeed). While seemingly distinct, these three functions are interrelated, the most obvious nexus being the imperative for investment pros seeking to steward Other People’s Money (OPM) to persuade potential clients to become and remain actual ones. read more ❯

Unnecessary Evils

2018

Founded at the turn of the current century by legendarily successful investor John Vogelstein, New Providence is led by experienced professionals who view investment counseling as a profession, not a business, and are committed to the pursuit of excellence in all aspects of their work. Such work centers on the shaping and ongoing refinement of both comprehensive and specialized investment programs for a select group of wealthy families and endowed charities. Given the US-centric bias of portfolios stewarded by many recipients of this call to action — a bias at odds with the very full current pricing of assets flattered by it — the time is ripe for such principals to undertake a thorough review of their investment policies and practices. read more ❯