Three converging trends—including a shift from negative to positive screening—are making it easier for investors to implement impact investment programs that deliver competitive returns.
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Developing markets face growing risks that present a clear and present danger to middle market firms embedded in those economies. Differentials in rate policy between the U.S. central bank and its foreign counterparts, an appreciating greenback, along with an atypical late business cycle fiscal boost, present the major driving forces in interest rate divergence between the United States and emerging economies. In this issue of The Real Economy, we explore the topic and more, including automakers’ response to tariffs and pricing reform in the pharmaceutical industry.
Market Excesses and Irrational Behavior
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Markets are hitting new highs justified by strong earnings growth and reasonably solid economic performance in this tenth year of the expansion. Absent the traditional economic warning signs, equity markets are exhibiting some unnatural distortions. The stock market is becoming quite concentrated in a select group of growth names, and investors appear overly willing to invest in growth stories across the capitalization spectrum.
Since the end of the Global Financial Crisis, abundant Central Bank liquidity has created a global rising tide for financial assets. Stocks, bonds, and real estate have been locked into a relentless, low volatility “melt-up” in valuation over the past nine years, culminating in the extraordinarily low volatility of 2017. This year has ushered in a new volatility regime as global Central Banks move toward a more restrictive monetary policy framework.
This session will share the perspective of a private equity entrepreneur and a significant institutional investor as he works with his son to develop their family’s long-term investment approach. The family will share how their investment program has evolved from concentrated private equity holdings within their single-family office to a systematic, global, factor-based multi-asset approach for themselves and other families.
Breakout 1 - Opportunities in Private Credit
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In this session, we will discuss where we are in the credit cycle and how to consider opportunities in private credit, focusing on direct lending and distressed debt. Cambridge's Head of Private Credit Research will moderate the discussion and portfolio managers from Angelo, Gordon & Co. and Ares Management will discuss credit strategies broadly, with a focus on their direct lending and distressed strategies, as well as other timely opportunities.
As interest in direct investing among ultra-wealthy families continues to grow, so do the challenges. How do investors maintain the discipline and risk controls of their overall investment program while allowing for the greater flexibility needed to take advantage of the opportunities in this space - while managing the many risks specific to direct investments. In this session, we will explore different structures and approaches used by families to meet these challenges.
Many family members and family offices are attracted to the idea of aligning their values with their investing. Yet many are confused or frustrated by the lack of straightforward methods and metrics to define an “impact investment,” particularly how to contrast these to more traditional investments. This session will discuss the significant evolution of analytics to determine whether investment returns on an “impact” investment are concessionary, and also new metrics to help quantify the social or environmental contribution of an investment.
A turbulent market can increase the effectiveness of harvesting tax losses – if you have an active tax-managementstrategy – and stick to it. This session will discuss the market’s uptick in volatility in Q1, why there are loss-harvesting opportunities even in bull markets, and the compounding benefits of tax alpha over time. The speaker will discuss the recent tax cuts and share his views on a tax-aware approach to investing in today’s complex markets.
Cryptocurrencies like Bitcoin and Ethereum get headlines, but is there really any “there” there? This session will take a hype-free look at what cryptocurrencies are, how they work, and why some people are so bullish about their longtermpotential. We'll also consider the biggest risks to the cryptocurrency experiment, including regulation, fraud, market fragmentation, and market manipulation.