Research-Driven Investment Consulting Firm NEPC Unveils New Diverse Manager Policy
Healthcare Organizations Maintain Economic Optimism Despite Geopolitical Concerns
— Only 25 percent of healthcare institutions expect the economy to worsen in 2019 —
BOSTON–(BUSINESS WIRE)–NEPC, LLC one of the industry’s largest independent, research-driven investment consulting firms, today announced the results of their latest Healthcare Operating Funds Survey, which gauges healthcare organizations’ outlook on the economy and examines how healthcare operating pools are invested.
The survey reveals participants’ investment strategies for 2019 are unlikely to change, despite an expectation from the majority (84 percent) of respondents that U.S. equities will increase by six percent or more in 2019. This optimism extended to investors’ outlooks for the overall economy and healthcare industry. Only 25 percent of respondents indicate the economy is in a worse position in 2019 when compared to last year and over a third believe their healthcare organization is better positioned this year.
Additional top findings include:
- Investors appear to have reduced risk: After observing an increased risk profile last year, participants reduced their risk profile following a spike in 2018 volatility. Notably, investors reduced their allocations to alternative investments (by 4 percent on average) and increased their exposure to fixed income assets (by 3 percent on average).
- Healthcare organizations maintain an optimistic economic outlook: Three-quarters of respondents indicated that the economy is either unchanged year-over-year or is well-positioned, while only 25 percent believe it is in a worse position relative to last year. When it comes to the outlook on organizational health, 78 percent of respondents believe their organization is either unchanged year-over-year (42 percent) or is better positioned than it was in 2018 (36 percent).
- Most respondents expect U.S. equities will be the best performing asset class: The majority of respondents (59 percent) expect U.S. equities to be the best performing asset class, up from only 13 percent last year. Eighty-four percent of respondents expect the asset class to return at least 6 percent in 2019, with only 8 percent indicating an expectation of negative returns. These strong market sentiments were buoyed by low expectations for interest rate increases. About 4 in 5 (79 percent) of respondents indicate they expect rates to maintain their current level or shift lower.
- Despite high expectations for U.S. equity returns, investment portfolios are unlikely to change: Despite significant expectations for returns on U.S. equities, 72 percent of respondents indicated that they don’t anticipate making changes to their investment strategy. This is likely due to potential global threats respondents see in the markets: Geopolitical uncertainty was listed as the greatest investment risk, followed by a potential global slowdown.
“While the outlook for the healthcare sector continues to be optimistic, geopolitical risk and resulting capital market volatility continue to weigh on organizations’ minds,” said Kevin Novak, Consultant at NEPC and a member of the firm’s Philanthropic Practice Group which services healthcare systems and endowments and foundations. “Last year’s turbulent market has left lasting impressions on healthcare investors, who recognized the impact that investment risk has on the organization.”
This survey highlights the need for healthcare institutions to evaluate risk at an organizational level, particularly within a sector replete with operational nuances and constraints. Evolving demands, healthtech innovations and an increase in digital health options for patients have led to industry-wide organizational change, meaning it’s more important for healthcare institutions to continually assess their risk and adjust their investment strategies to account for these changes.
“As an independent consultant, we are keenly aware of the growing importance of collaboration when it comes to analyzing disparate investment pools and building healthcare investment strategies from a holistic lens,” said David Moore, partner and practice leader for NEPC’s healthcare consultants. “It’s only through this big-picture thinking that investors can truly execute incisive investment strategies, allowing healthcare organizations both large and small to fulfill their mission while delivering the best patient care.”
For more information, view the full survey and infographic.
About the Survey
This NEPC survey was conducted online by the Healthcare Practice Group in April/May 2019. Respondents represented a diverse set of organizations in the healthcare investing sector. Copyright is held by NEPC.
About NEPC, LLC
NEPC® is an independent, full-service investment consulting firm, providing asset allocation, manager search, performance evaluation, and investment policy services. We work with discerning investors on both an advisory and discretionary basis. We service 360 retainer relationships, representing assets of $1 trillion with over $90 billion in healthcare-related assets, from our offices in Boston, Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Portland and San Francisco. We encourage your comments and feedback, as well as any inquiries you may have about our firm or our consulting services. Learn more at https://www.nepc.com/focus-areas/healthcare
Endowments and Foundations' Economic Concerns Triple in 2019
-- NEPC survey finds fears of a global economic slowdown in economic growth are 3x greater than in 2018. Nonprofits also weigh the impact of tax reform, the rise of donor-advised funds, and cryptocurrency donations --
Data Show Investors Value Collaborative, Long-Term Consultant Relationship - NEPC
NEPC Unveils ESG Ratings to Help Institutional Investors Differentiate Environmental, Social and Governance Approaches
NEPC, LLC, one of the industry's largest independent, full-service investment consulting firms, today announced a formalized Environment, Social and Governance (ESG) rating system using a combination of qualitative and quantitative measurements to provide an overall ESG integration score. The rating system has been in development over the last year in a joint effort among NEPC's Impact Investing Committee, its Research Department, and select clients. The system was developed in response to the continued interest across NEPC's client base to understand how investment firms are approaching ESG integration, as well as key characteristics that differentiate the best approaches in today's market.
NEPC's ESG Rankings are determined using a combination of qualitative research, such as one-on-one interviews with investment managers, at both the firm and the product level, and a quantitative rubric system measuring firm and product attributes. The score is calculated by evaluating the ESG commitment, resources and process, producing a scaled outcome from one to five where one is categorized as the best. Unlike other rating metrics, the NEPC process offers flexibility, focusing on the commitment of individual products as well as the overall firm, which can result in different outcomes for products under the same firm. What's more, the system offers the ability to rate products across different asset classes, allowing investors to gauge them based on their specific use case.
"With an extensive knowledge of the materiality of ESG already present within NEPC, we are excited to unveil a ratings system," says Mike Manning, Managing Partner at NEPC. "This approach, along with the team dedication of this project, will provide clients with advanced intel, identifying the nuances of ESG integration across asset classes. Ultimately, this will allow clients to have informed discussions about the commitment of ESG integration within their existing portfolios and of future additions to portfolios."
One of the advantages to this approach is that ratings can be updated on a continual basis, by constantly considering new developments in the industry, and enhancements introduced by investment firms. The scores will ever be evolving by using an exchange of information allowing the same process to be used across asset classes and managers. NEPC believes this method will give clients new tools and resources to help evaluate their portfolios most effectively.
This update comes after extensive research and formalizes, expands and quantifies a process NEPC has honed over the past several years. NEPC has long incorporated ESG information into manager search books, due diligence memos and other materials.
The new rating system launched in 2018 and will roll out in waves across NEPC's preferred lists.
About NEPC, LLC
NEPC, LLC is an independent, full service investment consulting firm, providing asset allocation, manager search, performance evaluation, and investment policy services. We work with institutional investment programs and private wealth clients on both an advisory and discretionary basis. We service 362 retainer relationships, representing assets of $1.0 trillion1 with approximately $62.0 billion2 in alternative assets, from our offices in Atlanta, Boston, Charlotte, Chicago, Detroit, Las Vegas, Portland and San Francisco.
1 As of 9/30/2018, includes 51 clients with discretionary assets of $17.7 billion.
2 As of 6/30/2018
NEPC Enhances Research Staff with New Director of Traditional Research and Portfolio Construction Team
BOSTON--(BUSINESS WIRE)--NEPC, LLC, one of the industry's largest independent, full-service investment consulting firms, today announced the hiring of Sarah Samuels as partner and Director of Traditional Research effective in April 2019. This strategic decision reflects NEPC's commitment to having a world-class Research team to identify differentiated ideas for a variety of clients.
Sarah's background includes recent leadership roles at the Wellesley College Investment Office and Massachusetts PRIM where she gained valuable experience investing across the global capital markets. Sarah also spent time in client service at Wellington Management Company and in portfolio management at Boston Advisors. She will bring additional leadership and a fresh and differentiated investment perspective to NEPC's Traditional Research team, the overall NEPC Research team, and NEPC collectively will benefit from her leadership. "These changes are going to have a powerful impact," said Tim McCusker, partner and Chief Investment Officer. "I believe we will become more efficient through a better structure and more insightful through specialization in Traditional Research and portfolio construction, including innovative ideas from our new team members."
Sarah will join NEPC in April 2019 to allow Tim Bruce, partner and former Director of Traditional Research, to focus on shaping the development of NEPC's new Portfolio Construction team. Tim and his team will be responsible for delivering customized client solutions and addressing client needs. These enhancements align with NEPC's strategic objectives and allow Research to execute on their top priorities and core mission, delivering incredible client service through investment excellence.
Additional updates to NEPC's Research team are expected and will be shared in the coming months.
About NEPC, LLC
NEPC, LLC is an independent, full service investment consulting firm, providing asset allocation, manager search, performance evaluation, and investment policy services. We work with institutional investment programs and private wealth clients on both an advisory and discretionary basis. We service 362 retainer relationships, representing assets of $1.0 trillion1 with approximately $62.0 billion2 in alternative assets, from our offices in Atlanta, Boston, Charlotte, Chicago, Detroit, Las Vegas, Portland and San Francisco.
Learn more at www.nepc.com.
1 As of 9/30/2018, includes 51 clients with discretionary assets of $17.7 billion.
2 As of 6/30/2018
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