Real Assets Adviser

May 1, 2020: Vol. 7, Number 5

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From the Current Issue

The commodity triple play in the midst of the COVID-19 economy

No one discounts the human cost of the pandemic that has swept the globe. Nor has the economic outlook brightened much, as governments and the private sector wrestle with the ramifications of COVID-19. But investors must look forward and seize opportunities as they arise. The best time to invest is often when economic prospects are uncertain, and the public mood soured. Invest in the darkest nights, sell on the high-noon parades.

Cannabis company executives speak to the industry’s trying times

The legalization of recreational and medical use of cannabis in Canada and several U.S. states has not created the expected demand, and oversupply of the crop has put pressure on both prices and the companies aiming to profit from the new industry. Marijuana stocks have been tumbling, with share prices of some of the biggest players falling as much as 70 percent — and that was before the COVID-19-inspired crash on Wall Street.

The investment opportunity in robotics

The robots are coming, and they are not just robo-advisers, driverless vehicles and assembly-line welders. What’s more, there are profits to be made by discerning investors. Venture capital firms — including Playground Global, FoundersX Ventures, of Y Combinator and GV — are among the more than 40 VCs raising money from high-net-worth individuals and families and bankrolling a rising tide of robotics companies that are designing and manufacturing everything from autonomous drones and warehouse carts to vitamin-size “pill cameras” and surgical assistants.

Private equity offers resilience in a downturn

Private equity has seen an influx of investors in recent years, many of whom are new to the asset class. In fact, 2018 marked the first year that more capital was raised through the private markets than the public markets, prompting some noteworthy consultants to suggest that we’re in the middle of one of the most profound shifts in the capital markets since the 19th century. The reason for this heightened investor interest is simple: Private equity acts as a portfolio diversifier and has generated strong historical returns at a time when growth has become increasingly hard to find. Private equity’s consistent long-term outperformance against major indexes is well documented, with the asset class generating 597 basis points of outperformance over a 20-year period and 489 basis points over a 15-year period versus the S&P 500.

5 Questions: Investing in raw land in America’s open spaces

Raw land and property in rural areas seem to rarely attract the attention of investors, however, there is a market for the buying and selling of ranches, plantations, farmland, timberland and recreational properties. And some of the country’s richest businesspeople — cable TV and media moguls Ted Turner and John Malone — the two largest landowners in the United States, own millions of acres of open lands.

Still a place for bonds in investor portfolios

It’s no secret that the yields available today on quality bonds such as Treasuries, Agencies and Municipals are miserly. I have recently been asked by a number of investors whether they should continue to hold or to purchase such bonds — or shift the money into higher-income assets such as high-yield bonds or preferred stocks. I believe quality investment-grade fixed income, even at today’s low yields, still plays an important role in a well-diversified portfolio.

The expanding vision for impact investing

There was a time when investors were happy to take a hands-off approach and let their advisers or a professional fund manager handle their portfolios and specific investments. The individual assets or equities were of little concern as long as they performed. This strategy obviously worked well, as baby boomers have amassed more wealth than any generation in history.

The roads of the future: Future networks could be stronger and less expensive

The global road network is one of the largest systems ever built by man. In the United States alone, the total length of roadway exceeds 4.1 million miles — enough to circle the Earth 165 times. While relatively simple to build as compared to other structures, such as skyscrapers or dams, the sheer scale of the global network makes road construction one of the largest sources of material consumption on our planet.

At long last, the cycle ends: PE firms, family offices seeking investment opportunities

Commercial real estate’s unusually long run of success over the past decade left many in the industry guessing when and how the cycle would end. All the guessing about the next recession is now over. The economic effects of COVID-19 have been transmitted to the entire population, and the world has not seen a global pandemic like this since 1918.

The future of real estate in a post-pandemic America

I know that some of the most dangerous words in investing are “it’s different this time.” I know that the 1979 Business Week cover story on “the death of equities” has been mocked for most of the past 40 years. I know that 2008 was primarily a financial and real estate crisis and that home prices and stock prices made new highs after six years. But I will say it anyway: What if it’s different this time? What if this is the death of real estate?

Profile: John Hyland, co-founder and managing director of Private Advisor Group

About halfway through my interview with John Hyland it becomes apparent the man doesn’t really fancy talking about himself. “People have made that comment many times throughout my life and career. I don’t love the spotlight,” he acknowledges. “I am happy to be in the background.” But this is anything but background; it’s the cover of a magazine, and an editor who prefers personality profiles to the standard and repetitive mumbo-jumbo talk about one’s firm and how it’s so distinctive from their competitors. Or so they think. Hyland speaks easily about his firm, and even stays away from the trite superlatives used by most RIA chieftains.

Blending gold with gold-mining equities

Gold and precious metals mining equities have suffered in the market downdraft along with other risk assets, down 20.3 percent year to date through March 17, after rising an impressive 52.9 percent in 2019. They have outperformed the S&P 500 marginally so far this year and meaningfully over the past 12 months. Changes in the macroeconomic and geopolitical risk environments have made both bullion and precious metals mining securities more attractive in the eyes of many investors.

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