Insight

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Asset Owners Prepare for Stagflation

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 …

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Why private credit's time has come in Asia

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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Financing economic growth with private debt

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 …

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Future Returns: Resetting Investment Expectations for 2022

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 …

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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?

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 …

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81% of Ultra-High-Net-Worth Individuals Use Alternative Investments

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 …

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Insurance CIOs Move Further into Alternative Assets

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 …

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The Big Allocation Move for Institutions in 2021: No Move at All

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 …

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