Wednesday, March 27, 2013

Preparing for Generation D

They are 75 million strong.  They hold nearly $27 trillion in assets.  When it comes to investing, they are active, with higher levels of income.  And they’re usually well-educated.  Accenture calls them “Generation D,” because what sets this group apart is their “deeply digital lifestyle.”

Theirs is a demographic based on behavior, not by age.  Accenture stumbled upon Generation D last summer while conducting a survey of current and future investors.  The group is a hybrid, made up of “Skeptical Millennials,” “Jaded Gen-Xers,” and “Trusting Boomers.”  The common thread is that “Gen D members typically use multiple devices in a given week to manage financial accounts, look up investment information, and pay bills.”  They use social media, and they do their own investment due diligence on the Internet.  Accenture says Generation D is a “vitally important group of investors.”

That’s the good news.  The bad news is the conclusion of another Accenture survey conducted at the same time – financial advisers aren’t reaching these investors.  They need to remedy this neglect by using online educational tools and resources to connect with Gen D, and integrate social media into their overall communications strategy.

But how important really is social media to building a financial advisory practice?  Just ask Chris Hughes, one of the co-founders of Facebook.  Hughes was the one who designed Barack Obama’s digital strategy for his first election campaign.  Obama’s use of social networking, podcasting, and mobile messaging helped win him the White House.

One of the worst casualties of the financial crisis was the erosion of trust between investors and their financial advisors.  Engaging Generation D on digital platforms is a golden opportunity for advisors to repair the rift, and reap the rewards.
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Tuesday, March 19, 2013

Is Regulation Keeping You Up At Night?

News outlets have been filled with articles on the settlement that hedge fund legend Steve Cohen recently reached with the SEC. The settlement which has been called historic by the likes of USA Today is just another example of the regulators push to go after “the bad guys” in wake of the Madoff fraud back in 2008.

Has Wall Street or better yet the hedge fund industry fallen off a cliff or is this just another example of things to come in this area of the capital markets?

It is clear that going after bad guys is something the SEC is focused on. There has not been a lack of headlines about funds that have done wrong by the markets.

Be that as it may, the irony is that the media never tries to find the “inside information” of what Hedge Funds have to do to comply with SEC guidelines. 

The hedge fund industry is constantly evolving both onshore and off, working to create and implement better systems, policies and procedures to comply with the ever changing regulation landscape. A recently published study by Credit Suisse found that hedge fund investors believe that constant regulatory constraints is one of the biggest threats to the industry.

In summary, the Hedge Fund industry is clearly listening to both the regulators and the investors but implementation and adoption of policies and procedures takes time. The question is… will it be fast enough for the regulators?



-The IIR Alternatives Team
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Friday, March 15, 2013

Is now the time to invest in Africa?

Africa seems to be the new darling of the emerging market managers who are looking for higher returns for their investment portfolio.

The demographics sound impressive:
  • Africa's population has rapidly increased over the last 40 years, and consequently, it is relatively young. In some African states, half or more of the population is under 25 years of age.
  • According to McKinsey & Associates, household consumption in Africa is now higher than India or Russia and is expected to continue to grow.
  • Africa is vast- 54 countries and 29 stock exchanges and different regions present different opportunities.
Original Photo: www.freeworldmaps.net


 European investors have been investing in Africa with much success over the last decade and now it seems that US pensions, endowments and foundations are starting to pay attention as well. There are many ways to access this market including private equity, publicly traded stocks, as well as direct plays in natural resources and infrastructure. However, investing in Africa is not for the faint of heart. The news headlines are filled with negative stories about violence and political instability. Here are some recent articles about this opportunity:

Africa: the final investment frontier? March 4, 2013
http://www.fundweb.co.uk/fund-strategy/issues/4th-march-2013/africa-the-final-investment-frontier/1066776.article

Is Investing in Africa a good bet? January 24, 2013
http://www.voanews.com/content/world-econd-forum-africa-24jan13/1590036.html

Follow the Fixer February 22, 2013
http://www.economist.com/blogs/schumpeter/2013/02/investing-africa

Africa Ripe for Investment December 5, 2012
http://money.cnn.com/2012/12/05/investing/africa-funds-stocks-bonds/index.html



We are currently researching the African market. Please let us know your thoughts by emailing us at
inalternatives@iirusa.com

-The IIR Alternatives Team
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Wednesday, February 27, 2013

What Will Distinguish Top Asset Managers in 2013? Innovation, Researchers Say

As defined contribution plans continue “the quest for new innovative products” in the alternatives space, money managers are going to have to notch up their product creativity.  Pension plan managers are looking for managers with unbundled fund options and customized target-date funds that offer multiple manager inputs. This search trend has created some challenges for large money managers as their smaller competitors have been able to adapt quickly to the needs of the DC plan market.

Pension Plans are also seeking more options in real assets, real estate, and private equity, and customized target-date funds provided by nimble small managers are allowing plans the flexibility they need for these allocations. This is good news for smaller managers, as asset owners are “basically asking for investment strategies traditionally managed by smaller managers,” said Ben Olmstead of eVestment LLC.

So what; is a large asset manager to do? According to research from Casey, Quirk & Associates and Cogent Research LLC, large managers could create replication strategies, refocus on product development and differentiation, and “recognize the shift” away from traditional equity and fixed income. While the largest managers are still growing assets, the managers that find a way to focus on asset classes and build expertise or differentiation have a chance to stay in the game, said Gary Shub of Boston Consulting Group.

Another arena larger managers are competing with their smaller peers is in emerging markets, where equity and debt saw more than $50 billion in inflows last year. However, while “it’s not too late to get in (to emerging markets),” Benjamin Phillips of Casey, Quirk & Associates said, managers will “need a highly differentiated product” to find any opportunity.

The Road Less Traveled

Here are some recent articles from Pension and Investments we found that illustrate plan sponsors’ search for innovation:

Demand for innovation threatens biggest firm
(Pensions & Investments, Kevin Olsen, February 18th , 2013)

Pension funds are unlikely to be part of any big equity push
(Pensions & Investments, Thao Hua, February 4th, 2013)


To share your thoughts about what you are seeing in the pension industry please get in touch with Francoise Van Keuren via email: fvankeuren@iirusa.com


-The IIR Alternatives Team
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Wednesday, February 20, 2013

Which Crop is the Next to Pop?

Agriculture can be contradictory asset class, with investors often viewing the opportunities as both over-heated and under-invested. But throughout our research with investors and managers alike, all signs points to permanent crops as the next segment to pop. 

Many investors lump long-time favorite timber into the permanent crop category – and there are some relative newcomers like palm oil and perennial energy crops that are also getting attention. But more frequently, we’re hearing that the more niche permanent crops are the ones to watch. Investors love these “boutique” items, such as avocados, almonds and pistachios because they, often command higher prices resulting in higher margins. There’s even a shift within individual commodities – with the more profitable and easy-to-peel Clementine orange gaining traction over the more cumbersome Valencia version. And with last summer’s drought still fresh on the mind of many investors, permanent crops are often viewed as a more palatable investment amid environmental instability. 

Of course, there are risks. While permanent crops may be a better buy amid weather volatility, they are subject to market volatility and the whims of consumer demand. And while Asian countries are among the biggest purchasers of U.S. permanent crops, there’s some anxiety that China will become a hefty competitor in some categories in the not so distance future.

Currently row crops still dominate, accounting for roughly 70% of most Ag Investors portfolios but with permanent crops showing so much promise we expect allocations to increase.

How do permanent crops factor into your agriculture investment strategy? Tell us and get involved with the AgReturn conference series. Contact Conference Producer Diana Middleton, dmiddleton@iirusa.com, for more details.

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Wednesday, February 13, 2013

The State of the Union… Now what?

Last night the President gave his annual State of the Union address laying out his plans for the economic future of the United States of America.  The main idea was more jobs. However you personally felt about the speech, we thought you would enjoy hearing what both sides of the aisle thought about Mr. Obama’s State of the Union. Below are links to some commentary on the speech for you to enjoy.

Chicago Tribune: State of the Union: Obama to GOP: Can we just move on?

The Washington Post: President Obama’s 2013 State of the Union by the numbers

USA Today:  Readers describe state of the union in a word: 'Screwed'

Forbes: 2013 State of the Union Recap


The IIR Alternatives Team is currently gearing up for GAIM Ops Cayman and our Investor Ops program held in April and June respectively. While the markets continue to experience significant volatility and uncertainty, one thing is certain, due diligence and strong operations have never been more important. Both events focus on these topics and we invite you to check out the programs by clicking here for GAIM Ops Cayman and here for Investor Ops. 

In addition to these exciting events our June calendar also includes our Private Placement Life Insurance event and our Direct and Alternative Investing Forum for Family Offices. If you need additional information or have any questions please get in touch with us.

-    The IIR Alternatives Team

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Monday, February 4, 2013

The Changing Face of the SEC

As Mary Jo White assumes the helm at the Securities and Exchange Commission, speculation as to whether anything or everything will change continues to fuel the regulatory flames.    Ben Protess and Benjamin Weiser of DealBook said that the appointment, in conjunction with other new nominations, demonstrated the President’s “resolve to hold Wall Street accountable for wrongdoing, extolling his candidates’ records as prosecutors.”    As noted in the WSJ, the nomination of Mary Jo White marks the first time a former prosecutor has been chosen to lead the Securities and Exchange Commission.   But, one must ask, is White’s prosecutorial background a preposterously delayed reaction to egregious infractions committed by members of the finance industry prior to 2008 or is it the beginning of a new, progressive, forward-thinking SEC?  

Comments made by Pippa Malmgren and former SEC Commissioner David Kotz at the recent GAIM USA event are worth considering when evaluating the changing SEC.   As Glen Florio summarized on OpenGamma, “Malmgren …raised the philosophical question of whether government can protect people from a loss in the first place. … we have a ‘bad guy’ that is publicly pulled off the stage, the public desire to feel the swamp is clear of the sharks is not yet fed. We will therefore continue to see a more aggressive regulatory approach.”  And regarding hedge funds in particular, Kotz acknowledged “the overall cost of all the disclosures is considerable, and they have little value. In many cases, documents are collected and just filed away. The SEC doesn’t have the resources to do much with them, so in many ways it can be seen as a waste of money.”

New leadership is always promising but without the proper resources, can we really anticipate change?

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