Moving from Wall Street to Main Street

Investors look to real assets in search of both yield and portfolio protection - and there is a luring sweetener – the relative price of real assets to financial assets is at its lowest level in nearly 100 years. Mega asset managers have already picked up the scent, and there may be good reason to expect some impetus towards mean reversion. BAML has advised that “it’s time to get out of financial assets and into real things,” urging clients to shift some portfolio assets from “Wall Street to Main Street.” The likes of BlackRock, Morgan Stanley and TIAA Global Asset Management are committing resources to the opportunity, having recently created new business units to focus on investing in real assets. Even bond giant, PIMCO, is currently promoting an overweight of real assets in its 2017 allocation outlook report.

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Reap What You Sow

Commodities managers may in fact benefit from a distinct advantage over their equity and fixed income peers – that is they seem to have a credible information advantage. Whilst a difficult pill to swallow is that one investor has a competitive advantage in understanding Apple or Google over another, it does however sound plausible that a seasoned futures trader can better interpret the shape of a curve, opportunities associated with contango and potential pitfalls of negative roll yield relative to many other investors

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GIIN Annual Impact Survey 2018

“Multi-national initiatives have built demand for impact investments. Approximately 60% of investors reported that they actively track the financial performance of their investments with respect to the Sustainable Development Goals (SDGs) or plan to do so soon. The SDGs and the COP21 agreement have highlighted the scale and urgency of the issues the global community faces. The initiatives provide a cohesive framework for how to address these challenges, particularly the urgent need for private capital to step up and fill the funding gap. The world is looking to impact investing to fulfil this role, and clients and companies increasingly seek out impact strategies, inspired by the role their money can play in building a brighter future.”

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