Real Assets Adviser

July 1, 2015: Vol. 2, Number 7

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From the Current Issue

Summertime Reset for Advisers: Seasonal slowdown in client traffic means RIAs can get refocused on their business processes

Summer is here, and many of your clients probably require less attention now that their thoughts have turned to vacation, and away from the vagaries of the market.

That makes the quieter summer season an ideal time to step back and do some planning when it comes to your own practice. After all, many advisers rarely take the time to focus on their practices because they are too busy tending to their clients’ affairs, particularly during tax season and the hectic year-end period.

The Cleantech Syndicate: Ultra-wealthy family offices bet big on renewables, even as they rake in rewards from fossil fuels

Any rich person’s investment portfolio is sufficiently well oiled to have capitalized lavishly on the robust U.S. energy sector. I’m talking about fossil fuels and the way the hydraulic fracturing (or “fracking”) revolution has catapulted the United States from a vulnerable energy-dependent state into the world’s number one producer of oil (having surpassed Saudi Arabia) and natural gas (having more recently surpassed Russia) to assume those dual crowns.

An Ocean of Opportunity: U.S. water infrastructure is busting at the seams, and investors are looking to make a splash

Water infrastructure in the United States needs an upgrade. The question is how will the needed projects be delivered.

Industry players say water infrastructure projects in the United States are ripe for the P3 model because of a highly fragmented market, tight municipal budgets, and the recognition that building and operating increasingly complex water projects is not an expertise of local governments.

Bring Back the Dying DB Plan: Economic consequences of failed retirement policy are too horrific to go unaddressed

Welcome to the Everything Boom — and, quite possibly, the Everything Bubble. Around the world, nearly every asset class is expensive by historical standards. Stocks and bonds; emerging markets and developed economies; urban office towers and American farmland; high-end housing; you name it, and it is trading at prices that are high by historical standards relative to fundamentals.

Daily Bread: Pricing nontraded REITs day by day

For more than 20 years, institutional investors have recognized commercial real estate as an essential asset class, often deserving of its own portfolio allocation of 8 percent to 10 percent or more. In fact, the investable universe of U.S. commercial real estate is estimated at nearly $13 trillion today, weighing in at just under half the U.S. public equities market cap of $27 trillion and approximately one-third the $38 trillion fixed-income market. Despite the compelling data in support of the “case for real estate,” private clients and smaller institutions have significantly lagged larger institutional investors’ allocations to real estate, often times limiting their investment choices to the classic 50/40/10 stocks/bonds/cash portfolio model. 

Food on the Negotiating Table: New trade deals are poised to boost U.S. agriculture exports.

Two regional trade pacts, namely the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP), have gathered momentum recently, with TPP poised to begin its final negotiation stretch in 2015. This is likely to turn the heat on Congress to take action with ratification, making export-focused agriculture a clear winner in that scenario.

The Oil Dividend: The low cost of petroleum and what it means for global hotel real estate

Hotels are nudging their way into the mainstream, with generous year-on-year increases in investment volume. A shortage of quality opportunities across traditional commercial real estate has generated interest, but investors are also seeing the substantial returns that can be made in the sector on the back of positive economic trends. The low price of oil is among these, and hotels are one of the few sectors inherently well positioned to reap the benefits.

Real Assets Mid-Year Report Card: The strong U.S. dollar has weighed heavily, but most asset classes are still producing sound returns

We are halfway through 2015 and investors are beginning to take stock of how their investments are doing. For nearly all real asset categories, the first half of the year has been pretty stable, maybe even boring. In general, it has been a slower, less extreme version of the last six months of 2014. If the sector was doing well in 2014, it is still doing well, but not quite as well. If returns were falling in 2014, they are still falling, just not as fast.

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