Real Estate and Alternative Assets Update

There Are Lots of Alternatives!

Equities have rebounded from nervousness associated with the Ukraine invasion, with the S&P 500 recently closing within 5% of its record highs, despite apparently lofty valuations, slowing economic growth, rising input prices and pressure on consumer spending. A yield curve inversion and the relative unattractiveness of bonds in a rising rate environment may partly explain the strength in equities, as investors get a dose of TINA and FOMO. However, a range of alternative investment choices does exist. Real estate, particularly the single-family rental market, looks set to benefit from structural and demographic change; private credit presents yield and diversification benefits, while infrastructure offers inflation-linked returns underpinned by government spending commitments.

 

Full Speed Ahead: Private credit outlook 2022 (Nuveen)

In this piece from Churchill, an investment specialist affiliated with Nuveen, they outline that portfolio construction issues, particularly selectivity and diversification, will be key determinants of success in private credit markets.

Proof-of-Stake: Crypto's path to energy efficiency & yield (FTSE Russell, 2022)

For compliance reasons, this paper is only accessible in certain geographies

FTSE Russell highlights the concern of some crypto investors – that of energy consumption used in mining, suggesting that Proof-of-Stake instead of Proof-of-Work, with its higher yield, may incentivise greater adoption of digital assets.

UK Build-to-Rent Market: Solutions for Investors (PineBridge, 2022)

PineBridge Investments highlights the attractions of the UK single-family rental market, given the structural shortage of homes and demographic trends – a situation they believe lends itself to offering attractive potential returns as well as protection against inflation fears.  

Video: BlackRock Future Forum Infrastructure Special (BlackRock, Mar 2022)

For compliance reasons, this paper is only accessible in certain geographies

U.S. Senator Rob Portman, an author of the Infrastructure Investment & Jobs Act, details the legislation’s path of deployment and the role of private capital. Jim Fitterling, CEO of Dow Inc., shares how businesses can facilitate and benefit from infrastructure modernisation, while BlackRock experts identify the opportunity for investors.

Man FRM Early View (Man Group, Apr 2022)

Man Group reflects on hedge fund performance during March, noting that in common with equity markets, performance was strong across a range of strategies, including systemic and discretionary macro and long/short equity.

The KITE Tool & its Application to Real Estate Markets (Macquarie AM, 2022)

Macquarie Asset Management has developed a proprietary tool, KITE, which analyses key market metrics and applies them across real estate markets, producing standard comparable results for different markets.

Video: Sustainable Agriculture and the Future of Food (Baillie Gifford, 2021)

In this video, Baillie Gifford investigates the food production cycle, which is likely to be disrupted by innovative technology and the demand for more sustainable practices. Opportunities exist both in companies involved in food production as well as those facilitating the changes.

Ukraine Conflict: UK real estate impacts (LGIM blog, Mar 2022)

For compliance reasons, this paper is NOT accessible in the United States and Canada

LGIM examines the effects of the Ukraine crisis on the UK commercial real estate market, noting that opportunities exist in Build-to-Rent residential and industrial space. Given the negative impact on discretionary consumer spending from rising food, fuel, and energy prices, as well as tax hikes, retail property is likely to remain under pressure.

Global Private Markets Review 2022 (McKinsey & Company)

The McKinsey Global Private Markets Review offers unparalleled insights across a range of alternative asset markets including real estate, private equity, infrastructure, and commodities.