The year 2018 ended on a far different note than it started, with the economy stronger and markets weaker than most had projected at the outset. More perplexingly, underlying economic fundamentals remain quite strong with declining gas prices and interests, and steady jobs and wage growth.
FOX Foresight keeps members up to date on the latest thinking on matters that affect enterprise families. It summarizes what we have been learning from our members and our subject matter experts over the last year. Please share it broadly within your family, your office, and your advisors.FOX Foresight is presented in 7 chapters:
Family offices are forging ahead despite volatility and uncertainty in the markets—increasing their appetite for direct investments in real estate and operating businesses—as they continue to reassess the more traditional approaches to building investment portfolios.
At the start of 2019, the market’s perception of risks and the resulting volatility is high, a stark contrast to the complacency and strong growth expectations in the prior year. It is important to reflect on recent history, but it is also important to recognize how expectations can change and stay grounded in a broad understanding of the business environment and market valuations—thus our themes as outlined in this Market Insights: the late stage expansion; the not-so-invisible hand; diversification fatigue; and not all international markets are equal.
There are three reasons why investors should be considering preferreds in a rising rates environment: its low duration structures, its wide credit spreads, and its high levels of income. In this video, Brian Cordes, discusses the reasons and highlights how preferreds can also offer some of the highest tax advantage income in the markets today.
Despite mounting cost pressures on their supply chains, just a fraction of middle market companies appear to be hedging commodity prices for the longer term. In this issue of The Real Economy, we examine that topic, as well as a government shutdown’s fallout on food stamp program funding, real GDP growth projections, and the current state of environmental, social and corporate governance practices, benefits, and reporting challenges.
With the emergence of "new and improved" non-traded REITs (NTRs), some investors have shrugged off the industry's checkered past, seeing NTRs as a less volatile alternative to listed REITs. However, investors may not realize they are paying higher fees for lower return potential, along with less liquidity, less diversification, and less pricing transparency. Here is a look at some of the lesser-known aspects of NTRs and how they stack up against listed REITs.
Despite ongoing discussions meant to defuse tensions and a 90-day “truce” between U.S. and China, the trade tariff issue has not gone away. Well-entrenched globalization trends are unlikely to be reversed, but protectionism could weigh on growth. Other global and non-U.S. economic overview includes share declines in oil and other commodities combined with tightening global financial conditions may pressure emerging markets.
Despite the challenging finish to 2018, this year could be better for REITs. Taking a top down view, there are three themes to look at with respect to how they will play out for real estate. First, the deceleration of economic growth. Second, the healthy employment and wage growth. Third, the change in interest rates being dependent on how healthy the U.S. economy is and where inflation ends up being. It's reasonable to expect that REITs can deliver both an absolute and relative return profile that's attractive to investors.
The roller coaster ride for midstream energy investors was particularly stomach churning in 2018, with the Alerian Midstream Energy Index ending the year down 18%, putting it 45% below its 2014 high. Even though oil prices have been pummeled, many master limited partnerships and other midstream businesses have exceeded cash flow expectations thanks to strong pipeline supply/demand fundamentals. To help investors make sense of what’s going on, five key questions are answered.