Real Assets Adviser

November 1, 2024: Vol. 11, Number 10

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From the Current Issue

Profile: Adam Malamed, CEO of Sanctuary Wealth

Adam Malamed’s penchant for business and earning money started early, with his first venture coming at age 8. The family spent the summer months of 1979 in the wooded bungalow colonies in the Catskill Mountains of Upstate New York. Malamed begged his parents to head there a day earlier than the rest of the crowd, giving him time to “borrow” a shopping cart from a local grocery store, which he used to cart people’s garbage to the dumpster a half-mile away, which was essential to prevent attracting raccoons and other animals that would pillage the trash, making a disturbance and ...

The retail renaissance has arrived in private real estate investing

Many have tried to make the case that U.S. private real estate fund values have bottomed. Don’t believe it. Persistently low property yields below borrowing costs signal that yields on popular property types such as warehouses, apartments and storage facilities need to rise further. We have rarely seen negative leverage stories with happy endings. In fact, over the course of 2024, we have continued to make the case that ...

Tax Update: The rising importance of tax efficiency in alternative investments

Alternative investments are growing in popularity within the wealth management industry, often inspired by pioneers like David Swensen, the godfather of alternatives. Swensen’s endowment model allocated a larger majority of assets to alternatives, reshaping portfolio construction. While Swensen’s approach has merit for individual investors, it’s crucial to remember that ...

The year of the active ETF

U.S. exchange-traded fund (ETF) assets have hit $10 trillion for the first time. That is still around half of the assets in traditional open-end mutual funds, but the gap is closing quickly. An increasingly larger part of this growth is coming from active ETFs, which have accounted for roughly one-third of ETF inflows year to date. More so, ETF launches have become increasingly ...

Why investors should be interested in the $1.1 trillion infrastructure asset class

Private infrastructure funds invest in the development, maintenance, and operation of essential systems, such as water, transportation, sanitation, pipelines, electrical grids and other resources necessary to society. A fund may acquire and manage an asset or provide financing for its development and maintenance. Funds may also invest in ...

Talking Points: Quotations from people in the news

Jonathan Gray, president of Blackstone, on why an accelerating recovery in most of the commercial property market would not be enough to save some over-indebted owners from having to take losses, mainly on offices: “Most of the losses will happen in the equity market, but there will be banks. Could a regional bank show up next month and say: ‘I have to take a $500 million or $1 billion write-down’? Yeah, there are still some losses that will work their way through the system.”

Research Roundup: November 2024

CB Insights investigates a look at how four technology giants are pursuing their sustainability goals through strategic investments, partnerships and other initiatives. The firm’s conclusions can be read in its report titled Big Tech in Energy: How Amazon, Google, Microsoft & Nvidia are advancing the global energy transition.

Power challenges not dampening record U.S. data center needs

Demand for data centers has never been higher, as evidenced by a record-breaking first half of 2024. According to JLL’s new U.S. Data Center Report — Midyear 2024, the colocation data center market doubled in size in the past four years amid growing concerns that this rapid growth is straining an already taxed U.S. power grid and an impending talent cliff. This booming demand shows no sign of ...

New measures could be a turning point for China economic growth and investor opportunities

Over the past week, China’s government surprised global markets with a series of significant policy announcements, aimed at boosting economic growth, stabilizing the property market and revitalizing the stock markets. This coordinated effort from China’s top regulators — the People’s Bank of China, China Securities Regulatory Commission, and the National Financial Regulatory Administration — marks a decisive shift from ...

200-mph passenger rail service planned from Southern California to Vegas

The Federal Railroad Administration officially signed the $3 billion grant agreement awarded to the Nevada Department of Transportation for Brightline West. Brightline West will be America’s first true high-speed rail project set to connect Southern California to Las Vegas, with trains traveling at more than 200 miles per hour. Several federal, state and local elected officials hailed the grant signing as a ...

Healthcare stocks shine in a dimming economy

In recent months, as uncertainty about the economy has grown, healthcare has benefited from a rotation into more defensive stocks. In our view, the setup for the sector remains attractive. Still-reasonable valuations, falling interest rates, a quiet U.S. election cycle (at least for healthcare), and rapid innovation all make the case for ...

Five ways the U.S. nuclear energy industry is evolving in 2024

The nuclear energy landscape in the United States is changing rapidly as demand for clean power rises and the nation strives to meet its climate goals. Thanks to the Bipartisan Infrastructure Law and the Inflation Reduction Act, the domestic nuclear industry is leveraging federal funding, loan authority and new tax incentives to extend reactor operations, increase capacity and ...

Fossil fuels surging: U.S. production at record highs

The United States is producing more oil and natural gas today than ever before, and far more than any other country. So, what roles did the Trump-Pence and Biden-Harris administrations play in this surge? The answer might surprise you, given the way each has talked publicly about fossil fuels: former President Donald Trump embracing them, and President Joe Biden and Vice President Kamala Harris focusing on reducing fossil fuel use to ...

How to build a brand: There’s more to differentiating than a logo and a name

In my October 2024 editorial, “Are you a leading firm?,” we focused on how to develop investment strategy and philosophy statements to help investors understand what differentiates your approach from those of your competitors. The answer lies in where you focus vis-à-vis your competitors, and equally important, where you don’t focus — and your competitors do.

Growing data center demand competes with outdated power grids as investors navigate challenges

In sprawling, windowless warehouses across the world, armies of servers hum like digital heartbeats. Rows of memory chips, snaking multicolored cables, winding circuits and rapidly spinning fans communicate ceaselessly to process exponential amounts of data in real time, powering everything from cloud storage to artificial intelligence (AI) systems. These concrete fortresses are at the backbone of global connectivity, and their prevalence is multiplying.

America’s dairy farms are disappearing, down 95% since the 1970s

Milton Orr looked across the rolling hills in northeast Tennessee. “I remember when we had over 1,000 dairy farms in this county. Now we have less than 40,” Orr, an agriculture adviser for Greene County, Tenn., told me with a tinge of sadness. That was six years ago. Today, only 14 dairy farms remain in Greene County, and there are only 125 dairy farms in all of Tennessee. Across the country, the dairy industry is seeing ...

Asset allocation for RIAs: Adopting institutional best practices for portfolio construction

Asset allocation, the distribution of investments across asset classes, is the single most critical factor influencing portfolio performance. Research by Brinson, Hood and Beebower (1986) revealed that asset allocation accounts for 93.6 percent of return variations, and Ibbotson and Kaplan (2000) confirmed more than 90 percent of a typical portfolio’s return variability stems from allocation decisions, rather than individual stock selection or market timing.

Four megatrends is likely to increase the appeal of alternatives

Ever since Carmen Reinhart and Kenneth Rogoff outlined the “this time is different” syndrome in their 2011 book This Time is Different: A Panoramic View of Eight Centuries of Financial Crises, economists and investment market researchers have been wary of using this analogy when analyzing market performance across asset classes.

5 Questions: MetLife executive William Pattison on the softening multifamily sector

Multifamily housing’s performance has been flagging in some markets, even as the U.S. housing shortage grinds on. Why the discrepancy? Over the past 30 years, apartment investors have not witnessed such a wide disparity in occupancy rates between markets as they are seeing today. New construction in high-growth Sun Belt markets is the main culprit. Dallas and Atlanta saw about 50 percent more multifamily completions than usual in 2022 and 2023, outpacing leasing rates. This has pushed vacancy rates in these markets above 10 percent, compared to the typical national average of 7 percent. However ...

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