Allocations to listed infrastructure have been on the rise in recent years amid growing demand for real assets offering relatively predictable cash flows and the potential for attractive real returns. A case for this asset class is made through an examination of its historical investment characteristics and the secular themes driving significant capital formation in infrastructure globally.
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Preferred securities play a unique role in capital markets and have unique investment attributes. They are fixed-income investments, but with certain equity characteristics such as deeper subordination in the capital structure. Investors are compensated with notably high rates of income. Despite preferreds’ long stated lives, abundant fixed-to-floating-rate preferred instruments can significantly diminish interest-rate risk in diversified portfolios. Since many preferred pay legal dividends, preferreds can also offer significant tax advantages.
One of the familiar adages to describe the price action in the stock market is “it takes the stairs up and the elevator down.” The dramatic decline in stock prices since mid-September 2018 certainly fits this pattern. Investment sentiment has turned decidedly negative: the American Association of Individual Investors’ latest reading showing bullish sentiment at just 20.9%, a 17-percentage point drop since the last reading. Is this a typical market “correction” or the start of something much more serious?
When it comes to the family, dynamics are changing. There is no longer one dominant family form in the U.S., according to Pew research. Parents are waiting longer to have children, and many millennials are living at home or taking a less direct route to adulthood. These shifts will continue in 2019 and shape how affluent families tackle interpersonal issues. As wealthy families move forward, there are three trends they should keep a close eye on and discuss with their family office or other advisors.
As higher interest rates, trade disputes, and slowing global growth cast a chill over markets, the US economy is completing a shift from a period of extended growth to the late stage of an economic cycle. While we do not know when exactly winter will arrive for the economy and markets, we are advising investors to brace for harsher climes. At the same time, we also encourage them to take advantage of an unseasonable mild stretch.
While the Treasury curve has continued to exhibit a flattening trend, taking it closer to an inversion, the municipal curve has marched to a different beat, even steepening slightly in 2018. The difference is apparent, especially when using a tax adjusted municipal curve to get a taxable equivalent. In fact, the relative slope between Treasuries and municipal debt is hovering around a record high, leading us to believe that municipal bonds are an attractive option for taxable investors relative to other fixed-income opportunities.
With 2018 coming to a close, investors are setting their sights on the year ahead. Will the record long bull market in the U.S. weather the storm of recent volatility? How will government actions affect the state of this late-stage expansion? Jason Pride, Chief Investment Officer – Private Client at Glenmede shared his 2019 themes alongside perspectives on the economy and financial markets and discussed his views as to how investors should position their portfolios entering into the new year.
The volatility in the markets at the end of 2018 raised concerns about the outlook for 2019. Investors may have worried that sources of support were “beyond the peaks”—peak liquidity and then, probably, peak growth in GDP and corporate earnings.
Women continue to make great strides in wealth. However, a general theme emerges across research revealing women are still restricted by their own lack of confidence in terms of financial knowledge and the approach to investments, risk, and their role in a business. Given that most women will have sole responsibility for their wealth at some point in their lives, it is critical for women to take ownership of their wealth.
Investments into qualified Opportunity Zone Funds offer attractive tax benefits, while catalyzing capital inflows into economically distressed communities. However, prudence is necessary in evaluating these investment opportunities as they come to market.