Insights

In a world increasingly dominated by flows and momentum, uncovering investable secular themes becomes critical in generating superior returns for our clients.

Our “Insights” seek to identify actionable investment themes and carefully articulate the logic behind why such themes are important and how they should evolve over time.

  • March 31, 2017: Makena Strategy Insights Letter

    Not Your Parents’ GDP Growth

    While real GDP growth is often considered a proxy for the forward progress in standards of living, shifting demographics (marked by aging, slower-growing populations) across the developed world require a rethinking of the long-held goal posts of absolute growth rates. Our latest Strategy Insights letter examines this reorientation, and probes the intergenerational consequences of a slower growth future.

    Download ↓ [PDF 317 KB]

  • December 31, 2016: Makena Strategy Insights Letter

    Shell Game: A Case for Active Management in Light of New Policy Proposals

    The current proposals for a border adjustment tax (BAT) and disallowance of corporate interest expense deductions are being touted as boosters to the overall US economy. Our latest Strategy Insights letter explores how these policies will more likely represent a redistribution of wealth across sectors versus promoting any growth of the aggregate pie. With potentially large shifts in relative attractiveness across sectors, and more uncertainty than usual given the magnitude of proposed reforms, active management across sectors is poised to outperform.

    Download ↓ [PDF 291 KB]

  • January 31, 2017: Makena Strategy Insights Note

    Inflation: Reasonably Strong Fundamentals + Trump = Higher Future Inflation in the US

    With healthy underlying inflationary pressures in the US economy prior to the election, President Trump’s goal to reduce income inequality via the “confiscation” of assets that is implied by heightened inflation show the path for inflation may be even higher going forward. This represents a shift in the investing environment that few investors have experienced, the last inflation period dating from the 70s. As a result, a focus on real assets, currency, and domestically focused companies are likely important for return enhancement.

    Download ↓ [PDF 472 KB]

  • September 30, 2016: Makena Strategy Insights Letter

    Policy and Rhetoric: Are The President-Elect’s Campaign Promises Achievable?

    Many promises were made on the campaign trail by both candidates but only Donald Trump’s intentions matter now. The country may be grappling with a more challenged income distribution landscape but will the campaign rhetoric of the President-Elect correct these issues that propelled him into the White House? Digging into comments around fiscal expansion, tax rate restructuring, and a manufacturing revival, our latest Strategy Insights Letter reveals a difficult balancing act ahead.

    Download ↓ [PDF 166 KB]

  • June 30, 2016: Makena Strategy Insights Letter

    Equity and Bond Markets: 60/40 Portfolio’s “Glory Days” May Be Nearing Their End

    For the last 5 years, the 60/40 has returned almost 9% annually with very low volatility thanks to negative correlation of bonds and stocks during this period. However, with near zero bond yields and languishing equity fundamentals, is reliance on that negative correlation for protection still a safe bet? Our latest Strategy Insights Letter discusses the return profile of bond and equity markets in today's environment and examines the risk of a 60/40 portfolio going forward.

    Download ↓ [PDF 263 KB]

  • March 31, 2016: Makena Strategy Insights Letter

    A Job or a Career: How Bifurcation of Incomes in the US May Lead to Lower Growth

    As job creation continues, it is important to understand the quality of those jobs in terms of the income they provide. The following analysis will shed some light on why real disposable US household income growth has been subdued for nearly a decade, and what it means for economic growth.

    Download ↓ [PDF 218 KB]

  • December 31, 2015: Makena Strategy Insights Letter

    Oil: A Buy for the Long-Run Investor

    It is no secret that oil is down approximately 50% from its recent peak in the summer of 2015. But questions abound: how low can oil go? How big is the supply “glut”? And most importantly, what do the announced capex cuts imply regarding global oil demand if oil prices are to stay in the $30-$40/barrel range?

    Download ↓ [PDF 337 KB]

  • September 30, 2015: Makena Strategy Insights Letter

    Emerging Markets: Finally Attractive Enough for a Significant Tilt?

    While it seems unlikely that EM growth will accelerate to the levels witnessed during the early 2000s, such growth is not a prerequisite for EM assets to be attractive: relative growth differentials between EM and DM are sufficient to drive superior EM returns over the next several years.

    Download ↓ [PDF 252 KB]

  • June 30, 2015: Makena Strategy Insights Letter

    The Rate Hike: Deeper Dive into the Impact on Equities

    As far as we can tell, this will be the first time since at least the ‘80s that the Fed will be hiking rates in a situation where growth is not accelerating. A 100 bps instantaneous increase in the yield of 10-year treasury would lead to a 20% sell-off in the S&P 500, due to market participants essentially adjusting multiples in light of a new interest rate outlook.

    Download ↓ [PDF 118 KB]

  • March 31, 2015: Makena Strategy Insights Letter

    Rates “Lift-Off”: How to Invest When History is No Longer a Guide

    The impact of a rate hike could certainly be a catalyst for an equity sell-off but without history as a guide we are left with only deductive reasoning, which typically only provides relatively vague forecast ranges. The days of a predictable policy path are now behind us as the Fed has gone to reacting to economic data as it comes out. How does the long term investor navigate these more volatile times?

    Download ↓ [PDF 180 KB]

  • December 31, 2014: Makena Strategy Insights Letter

    The ECBs Quantitative Easing Program: The Only Option Left, but Will it Work?

    Many attempts at jump-starting the Eurozone economy and thereby generating inflation have left us with an alphabet soup of ECB policies: ZIRP (zero interest rate policy), NIRP (negative interest rate policy), OMT (outright monetary transactions), LTRO (long-term refinancing operations), asset purchase programs, etc. On January 22nd, the ECB announced its own QE program.

    Download ↓ [PDF 275 KB]

  • September 30, 2014: Makena Strategy Insights Letter

    US Dollar Strength: What This Means for the Global Economy

    Since the beginning of the summer, the trade-weighted US dollar has appreciated approximately 8%, or over 35% on an annualized basis. Because the US dollar remains the cornerstone of the international monetary system, such a change has important ramifications for trade, growth and income on a global basis.

    Download ↓ [PDF 278 KB]

  • June 30, 2014: Makena Strategy Insights Letter

    Lower Growth is Here to Stay: Expect Subdued Returns

    Lower Fed forecasts finally acknowledge a reality that is very hard to accept, that is the lower potential growth of the US economy, and indeed perhaps that of the global economy. Should growth be lower than historically was the case, then returns to capital will likely be lower as well.

    Download ↓ [PDF 339 KB]

  • January 31, 2014: White Paper

    Europe: A Lost Decade Ahead?

    The credit crunch under way now for five years in Europe may have already created permanent and irreversible damage to those economies. We ask the question: Is Europe on its way to a lost decade?

    Download ↓ [PDF 3 MB]

  • December 31, 2013: Makena Strategy Insights Letter

    Wage, Income, Rates, Taxation, and Regulation: Why Growth Will Remain Below the Historical Trend

    The divergence between high and low earners explains why we see seemingly contradictory macro data: how can unemployment fall while real disposable household income remains unchanged? This is yet another headwind to growth in addition to increasing rates, increasing taxation and increasing regulation – all reasons why we believe long-term potential growth for the US will remain below the historic potential growth trend.

    Download ↓ [PDF 651 KB]

  • April 31, 2012: White Paper

    The Road Ahead for China

    The Chinese growth “miracle” is enabled by a series of policies that purposefully distort input markets in order to facilitate industrial development. In order to transition to a consumer-led economy, China needs to dismantle the distortions it put into place that led to the Chinese growth boom. That is a tall order.

    Download ↓ [PDF 807 KB]