Real Assets Adviser

September 1, 2020: Vol. 7, Number 8

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From the Current Issue

U.S. housing shakes off the coronavirus

Even as the U.S. economy has been largely crippled by the COVID-19 pandemic, the housing market is booming and likely the strongest component of the economy. Housing was surging prior to the pandemic too. Ivy Zelman of Zelman & Associates, featured on page 48 of the month’s edition, points to mortgage purchase origination data that shows half of those purchases are being made by people age 35 or younger. That’s right, millennials and Gen Z. This trend has been playing out for the past five years, she says, and the starter-home market is where the demand is strongest. Many of those young people are headed to the exurbs that ring metropolitan areas. In a reversal of fortune, there is a de-urbanization trend under way.

Blockchain implementation is booming, market to reach $40b by 2025

Blockchain has evolved from an experimental, disruptive technology to a strategic priority for organizations, according to a new global Deloitte survey that found nearly 40 percent of its respondents indicated strengthening commitment toward more investment and acquisition of strategic talent to pursue blockchain initiatives.

How to nail your virtual meeting and avoid ‘Zoom-out’

We’ve all seen the blooper videos of the gentleman with boxer shorts unintentionally shown on his Zoom meeting call, the dog barking incessantly in the background, the poor woman who is unmuted while in the restroom. Maybe you’ve been there (hopefully not), but one thing is for certain — virtual meetings are not going away any time soon. What was once thought as a supplement for an individual unable to attend a larger group or corporate meeting is now commonplace and you better be on your “A” game in order to succeed in the new age of digital meetings.

The future of waterborne real estate developments: Could they save at-risk structures — or even cities such as Miami and New Orleans?

Imagine waking to the sound of waves crashing at your door. Stepping onto your front porch for some deep-sea fishing, an endless blue horizon in every direction, watching whales breeching in the distance, before taking your jet ski down to your neighborhood’s local floating beach. Picture doing all of this somewhere out in the Pacific, immune from the rising ocean swallowing the world around you. This idyllic reimagining of the 1995 movie Waterworld might seem like a needless fantasy, but crises call for fantastical thinking — and with as many as 2 billion people slated to become climate refugees by the year 2100, according to research from Cornell University, this waterborne fantasy may be a necessity in our lifetimes.

The color of money: Closing the racial wealth gap with crowdfunding

Like many of you, we have spent the past few weeks grappling with the roots and current state of social unrest throughout the country. As part of better understanding the underlying tensions of the racial divisions in America, we have focused on the ways that our organization can reduce inequalities by building bridges and distributing resources to minority-led businesses and ventures. Unlike traditional capital markets, entrenched in policies that have continued to segregate and disenfranchise minorities, crowdfunding platforms offer a unique opportunity. These platforms increase transparency and resources for capital givers and capital seekers that can help us understand and breakdown inequalities that exist throughout the financial industry.

Profile: Michael Nathanson, CEO of The Colony Group stresses lifelong learning by travel and tome

There is nothing more central to understanding Michael Nathanson than books. He reads them by the hundreds and embeds their prescriptions into his personal and professional life. Name a subject and he is likely to cite a tome that speaks to it. Perhaps none has been more important to his career success than How Google Works, co-authored by a pair of Google executives. That book contributed mightily to a change in thinking that buttressed Nathanson’s confidence.

Next-generation nuclear power at the tipping point

We are on the cusp of a golden age of nuclear power, as the industry enters what is destined to become the most innovative decade for nuclear since the fission process began generating power more than 60 years ago. That is the essence of opening remarks made by Maria Korsnick at the virtually produced State of Nuclear Energy Industry 2020 conference. Korsnick, CEO of the Nuclear Energy Institute, pointed to the nearly 50 percent forecasted increase in worldwide demand for electricity by 2050 (according to U.S. Energy Information Administration), the urgency of finding carbon-free energy alternatives to combat climate change, and the fleet of next-generation nuclear power startup companies as powerful forces quickly aligning.

Opportunities in distressed credit

Since the pandemic broke, we have been living through an extraordinary market dislocation with impacts that will be felt in all sectors of the global economy. For advisers looking to reshuffle client portfolios, stressed and distressed credit represent an area of significant opportunity.

Taking the 60/40 portfolio to 75/25

The 60/40 portfolio has one of the best track records over the past 50 years. It has had positive returns 82 percent of the time over rolling one-year periods, 93 percent of the time over rolling three-year periods, and 99.4 percent of the time over rolling five-year periods. The returns were driven not just by stocks, but also by bonds, which had an average annual return of 7.5 percent from 1976–2019.

5 Questions: The outsourcing of fund administration

The proper operation of an investment fund requires a host of back-end administrative activities. Some fund managers carry out those tasks using an in-house team though, increasingly, fund managers are outsourcing to fund administrators, a third-party service provider. Connie Tirondola, head of North America real assets fund services at Citco Fund Services (USA) Inc., is one of the many people who work in the fund administration space.

Roundtable: What does the SEC’s Regulation Best Interest (Reg BI) mean — for better or worse — to the private wealth industry?

Doc Kennedy, founder and president, AdvisorLaw As a shock to precisely nobody, Reg BI has a lot to do with disclosure. Throughout the 175-page SEC release adopting Reg BI, there are 1,571 instances of the word “disclosure.” Reg BI requires full and precise disclosure of how wealth managers are paid; as well as requiring potential conflicts of interest be communicated to the clients. For those incorporating any products/investments that result in commission-based compensation, it is unclear if any explanation or defense will be accepted by regulators, as they are already making it clear that those receiving compensation of both fees and commissions will be heavily scrutinized.

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