Our research* shows that since 2008, European investors increasingly favour real assets, such as infrastructure and property. Before then it was mainly the preserve of large Australian and Canadian funds.
The search for yield and safe havens has created new patterns in investor behaviour, and these have grown stronger since.
Investors now recognise the value of real assets as vehicles generating real returns. Historically many investors shied away from such assets because of their lack of liquidity. However, the demand for yield is such that they are prepared to forego liquidity on larger parts of their portfolio to meet their investment targets, whether they are seeking return or inflation protection. As a result, institutional demand for infrastructure and utilities is on the rise. Read more
Back in the 1990s, the concept of 360-degree feedback really started to resonate with those in the human resources industry, particularly in the United States. The idea is fairly simple – that the true gauge of an employee’s performance should be based not solely upon the opinion of their manager, but rather on an amalgam of feedback from superiors, subordinates, and peers. The intent is to create a circle of input from those above, below, and around the employee to provide valuable feedback that will allow the employee to improve. As we now stride towards the midpoint of the Twenty-First Century’s second decade, it is the U.S. retirement industry that must adapt this concept to build upon successes of the Pension Protection Act of 2006 (2006 Act) in the goal of creating better retirement outcomes for U.S. savers. This is the primary finding of “A 360 Degree Approach to Preparing for Retirement,” a report authored by my firm, CREATE-Research, and sponsored by the Principal Financial Group. Read more
Preferences change. Tastes develop over time. You probably appreciate more and different foods than you did when you were a child. You change your diet to meet your needs – foods to benefit your heart, your cholesterol, your weight. You may even have a special menu designed specifically for you by a doctor or dietitian The investment industry is seeing a marked shift towards an era where this kind of evolution and customization will be key to success.
For years, investment managers have taken alpha to mean “beating a benchmark.” Alpha, as traditionally defined, is the excess return earned above a market index through active management. The manager was given a target and expected to beat it. That flavor of alpha is now giving way to solutions alpha. Read more
Every summer, Monaco is home to the annual Fund Forum International conference, a high-powered meeting of asset managers and fund selectors. The weather outside the conference is invariably gorgeous, but this year, the climate inside the conference was distinctly chilly. Why? The Fed’s suggestion that the flow of money into the markets in the form of quantitative easing might be coming to an end. This was made abundantly clear in recent market activity, but it was just as obvious with the participants at the Fund Forum. Shoulders were a little more slumped, brows a little more furrowed. Bond managers were downright fractious. Read more
On 15th February, the price of gold hit a six-month low of $1,608 per troy ounce, calling into question the precious metal’s credential as an all-weather asset class.
Contrary to widespread perception, gold has not been inflation proof. But it has been a good hedge in periods of market turmoil, when investors have been forced to flee to safe-haven assets.
As recently as last December, many institutional investors, as well as high net worth individuals, had gold allocations as high as 15% percent – 20% in India. Even after the recent rally in the equity markets, many wealth advisors still continue to favour ‘return of capital’ over ‘return on capital.’ Their rationale has more to do with the worries about the other asset classes and less to do with gold’s intrinsic merit. For gold to succeed, evidently, it is enough for other asset classes to fail. Gold does not have to succeed in its own right. Read more
The 2008 meltdown is finally in the rear view mirror. The global economy has moved on.
But the current market rally is driven largely by the growing sentiment that the worst is over: America has not gone over the fiscal cliff, the Eurozone has not split, China has not had a hard landing, and the price of oil has not spiked despite the unrest in the Middle East.
Previous rounds of quantitative easing in Europe and the U.S. have prevented all-out deflation. The latest round is the most potent. Markets have struggled to shrug it off.
Equities are set for a bounce. They look attractive relative to bonds. But the ice age for equities will thaw only when economic fundamentals begin to look stronger and more sustainable. The much-predicted stampede out of bonds will occur later rather than sooner – if there is one. Read more