Markets

For capital allocators concerned about exposing their clients to too much risk in real estate debt, specialists say asset discernment and due diligence are key to protecting investments in a rapidly growing sector.

The benchmark core equities sector is a fundamental sleeve in any sophisticated portfolio. Most profess top quartile returns, but which five have genuinely outperformed the market over a three year term?

Track record is vital, but a lack of comprehensive and independent research is often forcing investment teams to do their own due diligence when it comes to alternative managers.

“Volatility is the most persistent diversifier,” says Atlantic House Australian head Andrew Lakeman. “People are starting to realise that, as well as realising that diversity of assets in a portfolio – with different names – does not necessarily mean that you are diversified.”

In this head-to-head battle, Atchison Consultants analyst Mishan Dahia pitches Magellan and Clearbridge against each other in an infrastructure performance match up. Which one leads, and which one lags?

As we approach the bottom of the current cycle, fixed income is back to playing its traditional defensive role, says Yarra Capital Management’s Roy Keenan. To get equity-like returns without exposure to defaults, investment-grade credit should do the trick.

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.