Markets

After a “frenzy” in the pre-pandemic era, markets have calmed down significantly for private equity investment teams. There are opportunities, however, especially for management teams with patience and a little bit of nous.

Given the opportunity set in front of advisers during the next transfer of generational wealth, now may be the time to reassess the role of responsible investing and the importance of being an ethical steward for capital.

For non-bank corporate lenders that don’t have the regulatory oversight that banks do, using third party validation for loan books is essential according to Epsilon Direct Lending’s Joe Millward.

Bonds and equities are suddenly firm friends, but this is far from the first time they’ve positively correlated. And it’s not the only reason liquid alternative investments are being brought into focus as a non-correlated diversifier, managers believe.

The net-zero transition will bring about an economic transformation, with massive up-front investment leading to near-zero energy costs in the near future, ClearBridge Investments’ Nick Langley told industry leaders at The Inside Network’s ESG Retreat. But big challenges remain, with no easy answers.

Institutional investment teams may still oscillate between engagement and divestment as their first choice in leverage with large emitting companies, but one thing is certain – they are all looking at ways to hold these groups accountable for their activities and behaviours.

After a minor blip in 2022 residential property prices are once again soaring to new heights, driven largely by the asking price for houses in major capital cities. But not all is gold for sellers in the country.

To achieve the widespread adoption of green hydrogen necessary to reach net zero targets and for the companies in that sector to achieve their full potential, we are eventually going to need a high carbon price. And that looks still to be some way off.

“The portfolio does look different to mainstream,” says Australian Ethical portfolio manager and equity analyst Deana Mitchell, before explaining how the fund manager tilts up and down to meet its ethical charter.

“I wouldn’t employ someone from a growth house and try to turn them into a value investor,” says Rich Pzena. “It doesn’t work, they’re different people.”

As the world turns towards critical minerals like lithium to power electric vehicles, alternative access to investment in these sectors will become crucial pieces of the supply chain puzzle.

Most managed funds simply hold too many stocks to provide reliably effective returns for investors, according to Claremont Global head Bob Desmond, who says a quality, high-conviction strategy makes diversification less crucial.