Thought Leadership in Real Asset Investing

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 The environmental and energy policies anticipated under President-elect Donald Trump will substantially differ from those of the Biden-Harris administration. The energy sector, for example, rose sharply the day following Trump’s victory, with the Energy Select Sector SPDR Fund (XLE) rising over 4% on optimism about fossil fuel investments under Trump’s expected pro-oil and gas policies. In contrast, shares of renewable energy businesses declined dramatically across the board.  

In the face of economic instability and changing market conditions, investors are becoming more inclined to explore alternative assets as part of their allocation strategy.

Most investors construct their portfolios by allocating their investments to traditional assets, such as equities, fixed-income securities, and liquid funds. These can offer both growth and a degree of diversification. Nevertheless, certain investors pursue diversification that extends beyond these traditional asset categories.

The infrastructure secondaries market has undergone a transformation in recent years, serving as a portfolio management instrument for both fund investors and general partners, facilitating a consistent flow of assets for sale while managing aging portfolios. Industry analysts anticipate an increase in their utilization as investors seek efficient methods for exposure. 

Secondaries have emerged as highly coveted assets during market volatility, offering early exit options and diversity for portfolios.

"In 2022, the U.S. private equity industry and its companies generated $1.7 trillion of GDP. Today, diverse people account for roughly 30 percent, or $5 trillion, of purchasing power in the U.S. The alternatives industry has growing influence in an economy that is increasingly more diverse.

Diverse ecosystems, however, remain significantly undercapitalized. The Knight Foundation estimates that women and diverse-led firms represent less than 2% of the alternative asset management industry’s AUM. 

With a growing world population and rising incomes, global food systems will need to deliver 56% more food by 2050. Investments in agriculture infrastructure and associated technological advances can help strengthen global food supply chains by increasing operational efficiencies, lowering costs of production, and decreasing food losses. These advances can also contribute to climate change adaptation and mitigation by reducing the use of water, fertilizer and pesticides, displacing fossil fuel use, and minimizing waste throughout the agricultural supply chain. It’s estimated that global growth will boost food demand by 20,500 trillion calories by 2050—a potential opportunity for investors to make a positive difference.