Insight
All that’s new and noteworthy from events we’re throwing
or attending to new features and everything in between.
HNWs flock to alternative assets amid turbulence in traditional markets
HNWs are increasingly looking at alternative assets such as private equity and private debt to offset lower returns in traditional equity and bond markets, according to research by investment manager Connection Capital A survey of 1,200 HNWs carried out by Connection Capital found that the proportion of investors allocating a fifth or more of their portfolios to alternative assets rose from 26 per cent in 2018 to 41 per cent this year. Meanwhile, one in three HNWs surveyed is planning to increase exposure to alternative assets, compared to just one in seven for quoted equities. HNWs’ acceleration towards alternatives is …
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by Jaeho Park
More advisors turn to alternative investments to further diversify their clients in volatile market
Key Points After battling downturns in the stock and bond markets, more advisors are turning to alternative investments, according to a Cerulli Associates survey. Cerulli sees a “Goldilocks moment” for these assets amid demand for income, higher returns and volatility protection as more products become available. After battling downturns in the stock and bond markets, more financial advisors looking to further diversify their clients are turning to alternative investments, according to a recent survey from Cerulli Associates. Falling outside of traditional asset classes, alternative investments are typically added to portfolios for more diversification, income generation and the possibility of higher returns. The …
Publicby Jaeho Park
A global recession can be avoided, but risks are high
World real GDP likely declined in the second quarter of 2022, but this expected outcome is not inevitably the beginning of a global recession. Entering 2022, the global economy was headed for a major slowdown. As inflation raged, central banks accelerated the pace of monetary policy tightening, aiming to slow the growth of aggregate demand and calm price pressures. Two shocks intervened—Russia's invasion of Ukraine on 24 February and lockdowns in mainland China in response to a March-April surge in COVID-19 cases. These shocks further disrupted supply chains, adding to cost pressures. At the same time, soaring energy and food …
Publicby Jaeho Park
HNW investors turn to alternative assets for higher returns
High-net-worth investors (HNWIs) are allocating more to alternative assets such as private equity and private debt, as they diversify away from quoted markets in search of higher returns. Connection Capital’s private client Alternatives Investment Survey has revealed a radical overhaul of the traditional 60 per cent equities / 40 per cent bonds mix as investors shake up their portfolios in the face of dwindling returns. The survey has found that HNWIs are including much higher weightings of alternative investments in their portfolios than five years ago, with 41 per cent now allocating more than 20 per cent to the asset …
Publicby Jaeho Park
Asset Owners Prepare for Stagflation
In a survey of 202 investors globally, 51 percent said the global economy is entering a period of stagflation. Institutional investors are preparing their portfolios for stagflation, with differing approaches. In a CoreData Research survey of 202 global institutional investors, 51 percent of respondents said the surge in energy prices coupled with the Russia-Ukraine war will send the global economy into stagflation — a period characterized by high inflation, slowing economic growth, and high unemployment. In response to these fears, 43 percent of respondents said they plan to raise allocations to assets positively correlated to inflation, including commodities and real …
Publicby Jaeho Park
Why private credit's time has come in Asia
THE growth of the private credit market is fast becoming one of the most exciting stories in Australia's financial sector. It could also become one of its most successful exports.Globally, private credit has emerged as an investment buzzword for 2022, as more investors turn to assets that offer some protection from inflation and rising interest rates.In Asia-Pacific, Australia is leading the way - but the market is set to grow in Singapore and across the region, complementing traditional bank lending.Australia's private debt market has grown from A$35 billion (S$35 billion) in assets under management in 2015 to A$109 billion in …
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by Boram Kim
Financing economic growth with private debt
This article appeared in our Investment Outlook for 2022 ‘Shooting the rapids’. Read it here Despite concerns over a possible weakening of economic growth and intransigent price pressures, the broad picture at the end of 2021 was clear: Conditions in the G7 economies were improving thanks to large-scale fiscal and monetary stimulus which underpinned equity markets and kept interest rates low. As a result, equity valuations hit unattractive levels and bonds looked expensive. Finding appeal among more investors That mix has left private – unlisted – debt looking like a suitable alternative. For the same level of risk, it offers …
Publicby Jaeho Park
Future Returns: Resetting Investment Expectations for 2022
While economies across the world are strong, lofty valuations for public companies and the likelihood of interest-rate hikes mean investors are resetting their expectations for returns. “This next phase of the economic cycle is definitely going to be slower than the record-breaking rally and pivot in the cycle that we saw over the last two years,” says Amanda Agati, chief investment officer for PNC Financial Services Asset Management Group. “We think it’s going to be a much tougher slog.” Keep in mind, this more challenging outlook comes after a year when the S&P 500 index rose nearly 27%, capping a …
Publicby Jaeho Park
How does direct investment in global farmland provide diversification, inflation protection, and return potential?
How does direct investment in global farmland provide diversification, inflation protection, and return potential? By 2050, the world’s farmland will likely have to support a population of more than nine billion people— an increase that will require a 60% boost in agricultural productivity. At the same time, the developing world’s middle class is likely to continue to upgrade its diet, consuming more protein, and subsequently increasing pressure on global grain supplies. Moreover, industrialization and urban development continue to encroach upon the world’s finite farmland resources. As water becomes an increasingly scarce resource, agricultural regions with sustainable water supply will become …
Publicby Jaeho Park
81% of Ultra-High-Net-Worth Individuals Use Alternative Investments
It's no secret that the ultra-rich have access to alternative investment opportunities that seem unavailable or unobtainable to the average investor, like expensive wine, vintage cars, fine art, equity in private companies, and real estate. What may come as a surprise is that ultra-high-net-worth investors (those with a net worth of at least $30 million) have, on average, 50% of their assets in alternative investments. And they are likely to allocate even more of their portfolio toward alternative investments in coming years, despite the recent strong performance of major stock market indices. Before going further, let's define "alternative investment." Alternative …
Publicby Jaeho Park
Insurance CIOs Move Further into Alternative Assets
As low interest rates yield low returns, insurers are looking to non-traditional investments to enhance portfolio returns, according to a new KKR survey. As interest rates remain low, so do insurance companies’ investment yields — a trend that’s causing structural shifts in asset allocation throughout the sector. In a survey of its top 50 insurance clients, global investment firm KKR found that respondents moved more money to alternative assets over the period from 2017 to 2021. Allocations to non-traditional investments increased from 20.4 percent in 2017 to 31.8 percent in 2021, according to the survey.Respondents made these changes largely by shifting …
Publicby Jaeho Park
The Big Allocation Move for Institutions in 2021: No Move at All
After navigating a decade with interest rates at or near historic lows, institutional investors are coming to grips with a key risk that’s been amped up by 2020’s pandemic economy: negative interest rates.Decision makers participating in the Natixis 2021 Institutional Outlook Survey1 see negative rates as their top portfolio risk. They’re also worried about market volatility, and faced with uncertain prospects they have gone so far as to reduce return assumptions by an average of 60 basis points.Even as they face these significant challenges, a majority of institutional investors plan to make no change to their asset allocation strategy in …
Publicby Jaeho Park