Atlantic Trust Private Wealth Management views the risk of recession as low in the short term. Gas prices have garnered a great deal of attention and do put a dent in the economy’s potential growth rate in the months ahead. However, a sustained increase in the price of oil well above current levels would be necessary to create a recession. The biggest risk to the economy exists in 2013.
Resource Search
We reiterate five themes that serve to protect portfolios to some degree and offer some upside potential: gold as a hedge against currency realignments, oil as a hedge against Middle East instability, exposure to the global consumer over the long term, exposure to Asia (ex-Japan) over the long term, and exposure to relative value hedge managers who can move capital more nimbly and take advantage of asset mispricings.
Investors who prefer a less volatile loan return may favor the U.S. loan market. Less risk-averse investors may find the potential for higher loan returns in the European loan market appealing as they may feel the additional spread premium offered in that market compensates for the additional macroeconomic and market technical risk.
Historically, institutional investors have searched new areas for investments that add return and reduce risk, particularly in today’s volatile and synchronized global financial markets. One area that is coming into focus, with low institutional investment thus far is agriculture. At the same time investor interest grows, the need for capital by agriculture is rising in order to meet the demands placed upon food production by a growing world population, rising incomes and urbanization.
Rather than trying to seasonally time the market, most investors would be better served by staying fully invested unless there are fundamental reasons to reduce stock exposures. Volatility is likely, as investors weigh the ongoing debt crisis in Europe, the slowdown in China, the strength of the U.S. economy, and the resolution of the "fiscal cliff". But looking out longer term, stocks currently look relatively well-positioned, especially compared to alternatives such as cash and bonds.
This paper addresses how inefficiencies may be exploited to help generate alpha. This viewpoint is developed from our assertion that outperformance requires strong fundamental research and insight by skilled managers, and looks at the methods by which alpha may be extracted under the umbrella topics of Concentration, Opacity (or lack of public information), Illiquidity, Leverage, and Skill (COILS).
In spite of government intervention, economic recovery in most developed economies remains anaemic and equity markets volatile. At the same time, the emerging markets continue to surge. This keynote address given at the 2012 Global Investment Forum by a respected investment strategist examined the structural forces that are reshaping the investment landscape and addressed the optimal investment strategy for families in the short and long-term. Key areas of focus:
The emerging markets have increasingly become a motor of global economic growth as western economies languish. This 2012 Global Investment Forum session examined several key questions. How should families evaluate the relative attractiveness of the emerging markets (BRICs, Next-11)? What portion – or a lower and upper range - of an overall portfolio may families wish to allocate to the emerging markets? Which asset classes afford the best risk-adjusted returns (public vs. private equity funds, direct, fixed income, distressed assets, commodities, etc.)?
At the 2012 Global Investment Forum, this expert panel examined opportunities linked to increased interest in asset classes – direct investing, distressed assets and global fixed income – resulting from disjuncture in the world economy, the current financial crisis and its longer-term aftermath.
A long-term perspective is difficult to maintain through the roller coaster of the past 10 years. It is reasonable to wonder when we will revisit the much preferred bull market of the 1980s and 1990s. While we think world equity markets should earn positive real rates of return over the next five to 10 years, we are less certain there will be a multi-year, low-volatility run-up.