Publications

- October 1, 2019: Vol. 6, Number 9

Notes and trends: Professional athletes and angel investors

by Mike Consol

How can professional athletes — so dexterous with hands and feet in their manipulation of baseballs, basketballs, footballs and other sporting objects and objectives — be so ham-fisted with money? Professional athletes going broke is an old and continuing story, which begs the question: Why do rich pro athletes so often go bust? David Johan of Altruist Advisors counts several professional athletes among his clientele and takes measures to help ensure they do not run into foul territory and ill-fated financial endings. That requires a gameplan, argues Johan, who also serves as an editorial advisory board member for this magazine. He discusses the matter on this month’s 5 Questions feature.

Editorial director Larry Gray writes about the tidal wave of assets under management that has been accumulated by the top 10 real estate managers, who now control $1.2 trillion in client assets. By way of comparison, he points out the top 10 investment managers today have assets under management equal to the aggregate of the top 100 firms in 2008.

While commitments to real estate investment strategies have been huge since the great financial crisis, so have commitments to infrastructure, which had a record year in 2018, according to a UBS report synthesized on page 21. Some $89.5 billion was raised from infrastructure investors during 2018, exceeding the previous fundraising record of $73.4 billion set in 2017. And they have been rewarded with gross absolute returns of 11.8 percent for the 12 months ended September 2018, with transportation infrastructure leading the way with a 14.9 percent in 2018, while energy assets posted a 10.2 percent return. The UBS report also found private infrastructure investors have shifted to riskier strategies.

More evidence of investors’ appetite for risk in the pursuit of bigger returns is found on page 38 of this edition, in a feature story reported by Anna Robaton, one of our regular contributors. She writes that high-net-worth individuals and families are increasingly gravitating to angel investing, the kind of high-risk investing made famous by the TV program “Shark Tank,” as they seek to underwrite promising early-stage startup companies in hopes those entrepreneurs will hit big and parlay their investment into a major payday. Witness that during 2018 alone, the number of active angel investors grew by 16 percent over the prior year to nearly 335,000, and the number of ventures that received angel funding climbed by more than 7 percent to 66,110. The story quotes Jeffrey Sica, a veteran adviser to high-net-worth investors, point out: “There’s a greater appetite for risk than I’ve ever seen,”

On the cover is Clare Golla, an executive with Bernstein Private Wealth, who has direct experience with both extremes of the wealth spectrum. Golla started her career as a social worker, attending to the destitute and needy. Then came a phone call from Bernstein, asking her to interview with the organization. She had little interest in the notion, though she grudgingly agreed to a meeting. Things clicked, and Golla not only joined Bernstein, she also quickly started accumulating titles and responsibilities. Most recently, she added the role of head of endowment and foundation advisory services, while also serving on the firm’s global responsible investing committee and the national philanthropy services team. On the philanthropic front, she observes, “religious causes are still the most popular nationally, followed by education, though both of those categories have been declining. On the rise are healthcare, environmental causes and giving to various international causes.”

One of our previous cover subjects, Peter Mallouk of Creative Planning (May 2018 edition), is featured in this month’s Parting Shot page for having boosted his firm’s assets under management from $34 billion in mid-2018 to $42 billion currently — and he accomplished that expansion having made only one acquisition since buying the firm 15 years ago, and that accounted for only $500 million of the total. At that time of Mallouk’s purchase of Creative Planning, the firm had only one office and $100 million in AUM, and has since averaged AUM growth of about $2.8 billion annually and 25 offices. An astounding record of growth.

We have a first-time contributor for our Last Word column, Igor Perepelychnyi, CEO of innovation assets management at Setcoin Group in London, writing about the potential revolution in vertical farming. What a plucky guy Igor turned out to be — arguing with me via email about the proper headline for the column. At first, I instinctively got defensive. Then I turned the tables and asked what headline he thought would be suitable, and he boldly suggested, “How to feed 10 billion people,” which is what we used. I took authorship of the deck (or subhead): “Innovations in vertical farming could expand food supply and help mitigate impact of climate change.” A good team effort. Expect to see more content from Igor Perepelychnyi, who writes intelligently about a variety of interesting subjects relevant to investors. And, I guess, I should expect some more headline negotiations with this Ukraine expat who has found a new professional home in London.

 

Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.

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