Real Assets Adviser

December 1, 2016; Vol. 3, Number 12

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From the Current Issue

The Role of Commodities in the Diversified Portfolio: Since 1800 the average bear market lasted nearly 20 years while the average bull market only 16 years

Few investable asset classes create more passion, enthusiasm and controversy than commodities — especially gold. With the recent significant drop in industrial commodity demand due to slowing world growth and the oversupply in oil, investors have been asking hard questions about whether commodities should be considered for inclusion in a well-diversified portfolio. Others have questions about how they should access different sub-asset classes and how they should allocate across various commodities.

Running Strong: Robust underlying demand fundamentals keep investors bullish on the apartment sector

Like Jamaican sprinter Usain Bolt, the apartment market shot out of the blocks once the dust settled from the global financial crisis. And like Bolt, who has held the title of “world’s fastest human” for nearly a decade, the apartment market’s run has been impressive.

On the heels of the financial market implosion and economic recession, the U.S. apartment market posted a dismal total return of –17.5 percent in 2009, according to the NCREIF Property Index apartment subindex. The apartment sector, however, came roaring back in 2010 with a total return of 18.2 percent and has been putting up impressive numbers ever since: 15.5 percent in 2011, 11.2 percent in 2012, 10.4 percent in 2013, 10.3 percent in 2014 and 12.0 percent in 2015. And keep in mind the NCREIF figures are all unleveraged returns, so many investors were achieving much higher leveraged returns.

Six Reasons to Invest in Africa: The continent still tests investor patience, but there is money to be made for those bold enough to take on the challenge

The conversation about Africa is shifting from one of “deficits” and “gaps” to one about opportunities, prospects, ventures and creativity. That is not news to companies that have paid close attention to the continent and invested there. The fast-growing youth population, the urbanization expected to drive more than 50 percent of Africans to cities by 2050, and Africa’s formalizing economy are all well known. These trends and other developments have driven a half-century or more of growth in Africa and will continue to do so.

That Conversation about Client Fees: United Capital CEO Joe Duran is seeing more client pushback on fees and thinks many advisers are doing a poor job of explaining and delivering their value

Q: You were recently involved in a lively discussion about pricing and the fact that more advisers are feeling the pressure to have conversations about fees with their clients. That became a hot topic for you at a recent event you attended. Tell us about that.
A: A few weeks ago, I was in Connecticut meeting with a firm that just joined our network, and for the first time in my career, I had multiple people asking questions about cost. I had shared that I thought that the equity markets were not going to be as good as they’ve been in the past, that we might not be surprised to see a 3 percent to 6 percent equity return for the next five years or so. Everyone knows fixed incomes are one-and-a-half percent, and they said, I don’t feel like we should be paying you 1 percent. It was fine paying you that much when the markets were going up 15 percent and fixed income was at 6 percent. But I feel like we should be paying you less. 

Active vs. Passive: What the historical record has to say about the wisdom of these two styles of investing

The debate that began several decades ago over the merits and shortcomings of active versus passive management is ongoing. Reports on the topic by investment professionals and academics continue to be published unabated and seem to be one of the investment world’s more popular literary pursuits. While there is hardly a need to add another voice to the discussion, it makes sense to look at the record on active versus passive investing.

Going Solar, Going Micro: Microgrids could bring power to a world largely in the dark.

Haiti is the poorest country in the western hemisphere. Only 25 percent of the 10.3 million people in the country have access to electricity, but one nonprofit organization is testing a solution that could not only change the lives of the un-electrified in Haiti, but also could be a model of how to bring electricity to the 1.2 billion people in the world still living in the dark.

More Fanfare for Commoners: Why your clients

We have heard the saying that “the rich get richer,” and we all know that it takes money to make money. If it seems like wealthy people have special tools we don’t know about that help them grow their wealth more successfully, alternative investments could be the key.

Industrial Might: Developers and investors should cast a wider net in the service of e-commerce

The proliferation of e-commerce is redefining the role of real estate in the retail supply chain. The U.S. Census reports that e-commerce revenue grew by an annualized rate of more than 21 percent between 2000 and 2014 while in-store retail sales grew at less than 3 percent. The growth in online shopping and its higher rate of product returns have combined to dramatically increase the need for warehouse space. 

Rocky Mountain High: Denver apartment sale sets Colorado record

Florida-based Pensam Residential, BH Equities and Wafra Capital Partners have acquired a majority stake in The Breakers Resort, a 1,523-unit apartment complex in Denver, for $350 million or nearly $230,000 per unit. The sellers were The Bascom Group and Denver-based Koelbel & Co., which will remain as a minority partner.

Reclaiming Her Birthright: Alexandra Lebenthal sold her family’s storied 91-year-old Wall Street firm, and then took it back

The year was 2001 and Wall Street fixture Alexandra Lebenthal made a decision that would eventually come back to haunt her. She sold her eponymously named firm, Lebenthal & Co. Founded by her grandparents in 1925, the company was subsequently turned into one of the big brand names in the financial business by her father, making himself and the business famous through his showmanship during years of TV and radio advertisements. Alexandra Lebenthal also began starring in the TV and radio spots.

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