No crystal ball on FY2016 results

Experts share expectations for the rest of the fiscal year
By: | Issue: April, 2016
March 25, 2016

It’s certainly not black or white for investors.

“The discussion around the table in investment committees is: How do you allocate risk across various investment options available to optimize returns for five to seven years? There isn’t a neat, pat answer,” says Bill Jarvis of the Commonfund Institute.

The problem: While stocks and bonds assure liquidity and access to investment capital, their return on investment is below the 7 to 7.5 percent that schools target. Alternative strategies that have potential for a higher return rate than stocks and bonds tie up capital for 10 to 12 years, making them less appealing for institutions that need more liquidity.

While nobody has a crystal ball, here’s what some experts say about what to expect for fiscal year 2016:

  • Stuart Mason, University of Minnesota: “On average the estimate now for stocks is 5 percent and it’s 2 percent for bonds.”
  • Brad Conger, director of the Investment Strategy Group at Hirtle Callaghan: “Halfway through the year, it’s easy to say that the numbers will be underwhelming and below that 6 percent 10-year average.”
  • Trey Thompson, Perella Weinberg Partners: “We’re counseling clients to expect more muted returns over the next five to seven years when compared to healthy returns produced since 2009.”