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Real Assets Adviser

August 1, 2015: Vol. 2, Number 8

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  • Playing Those Mind Games: Advisers should utilize financial psychology to work more effectively with clients

    Very early in the career of a financial adviser, he or she is faced with a situation in which a client is clearly acting outside of the client’s best financial interests, and is either unable or unwilling to change. This could include overspending, under-saving, buying high and selling low, or not following through on financial planning advice. Often the adviser gives sound suggestions but the client will not act on them. Financial psychology can help advisers understand their clients’ beliefs and behaviors and equip advisers with tools and techniques to help.

  • Going for Impact: Lisette Cooper has built Athena Capital on the wave of investors committed to values-based investing

    One of the turning points in Lisette Cooper’s life was the evening Robert Rubin flew into Cambridge for a cocktail party with Harvard Business School students. Cooper recalls walking up to the former Treasury Secretary for the Clinton administration and partner at Goldman Sachs, to ask him what someone like she could do on Wall Street.

  • Oil Change: Gyrating crude prices have spooked investors, and experts disagree if prices will go up or down

    Not too many people enjoyed the rollercoaster ride in oil prices over the past year. The speed was too fast, the ups-and-downs dizzying, and when it was all over we all felt a little … unsettled.

    So, do we climb back on for another ride?

    Probably not. It appears the road ahead will flatten, although by how much is really just guesswork. Most folks in the oil or investment business will admit the $115 per barrel for Brent crude oil in June 2014 was too high, but the correction to about $45 per barrel in January was too low.

  • Heart and Soul and Yield: Women and millennials are especially keen about investing in ways that make a social impact

    Green investing. Sustainable investing. Socially responsible investing (SRI). Environmental, social and corporate governance (ESG) investing. Impact investing.

    No matter how it is described, a movement is slowly taking hold among investors. They no longer want to invest simply for returns. They want to invest to do good while realizing those returns. In the past, investors wanting to do good often simply avoided investments in companies that were involved in activities at odds with their values. Now, they are not just avoiding coal, blood diamonds and tobacco, they are looking to promote positive change by supporting investments that support their values, such as firms that use sustainable farming practices or environmentally sustainable building management practices or ethically sourced raw materials.

  • Cash at the Inn: U.S. lodging market is sparking big deals

    U.S. hotels are hot properties this year, with another luxury hotel changing hands recently. Host Hotels & Resorts has acquired the 643-room Phoenician resort in Scottsdale, Ariz., for $400 million.

  • CREO, Cleantech Groups Merging: Combined organization will be a family office network representing $80 billion in investable capital

    The CREO Network and Cleantech Syndicate are merging and will operate their combined organizations under the name CREO Syndicate.

    The merger creates one of the largest private networks serving family offices and private investors within the global environmental, energy efficiency and clean energy marketplace.

  • Green Acres: Farm leverage is on the rise, but from record lows

    Until recently, high commodity prices and low interest rates helped sustain double-digit gains in farmland values, garnering the attention of farmers and investors alike. In fact, investors started paying closer attention to the agricultural asset class in the previous commodity bull market of 2006–2008, first by pouring money into agricultural commodities, then venturing into direct farmland investments.

  • Hard Assets: There is a crucial component of the endowment model that individual investors often overlook

    Real assets, also known as hard assets, are to Yale’s and Harvard’s endowment investing model what logs are to cabins. Real assets — the umbrella term for real estate, commodities, energy, infrastructure, natural resources and master limited partnerships — are a crucial component of the endowment model of investing because of their response to economic cycles and their fundamental merits. They are not just for institutional investors; they belong in the portfolios of individual investors as well.

  • Infra-Red, Infra-Black: Maturing infrastructure asset class needs performance benchmarks that tell the tale

    The investment characteristics of infrastructure are attracting a surge of capital to the asset class, with long-standing Australian and Canadian investors now being joined by pension funds and sovereign investors from the United States, Asia, Europe and the Middle East. As the institutional market grows, demand rises for tools to better monitor and benchmark the asset class, particularly from the perspective of risk managers and capital allocators.

  • Targeting OECD Nations: KKR closes $3.1 billion global infrastructure fund

    Kohlberg Kravis Roberts, the New York City–based investment firm, has closed a $3.1 billion global fund aiming to make infrastructure investments in energy supply chain, water systems, roads, railways, airports and communications networks. The fund’s principal geographic targets will be projects in countries that are members of the OECD — an organization that represents 14 nations including Australia, Canada, Estonia, Germany, Mexico, Norway, Poland, Turkey and the United States, among others.

  • Lessons of Real Estate Cycles Past: Historic downturns have important takeaways for today

    No different from other economic sectors, commercial real estate markets are cyclical — tracking the broader economy, albeit on a lag basis. Economic cycles affect the supply and demand for both the use of commercial real estate (the space market) and for investment in real estate (the asset or capital market).

  • Lost in Cyberspace: The three biggest social media mistakes advisers make

    If you have ever seen the movie Chef, you know how hairy things can get if you try using social media without the proper knowledge. One clip from the movie shows how Jon Favreau’s character replies to a tweet thinking it is private when, in fact, it was sent publicly to his nemesis, a food critic who shared it with thousands of his followers. And, it was his son, of all people, who had to explain what he accidentally did.

  • Money and Millennials: They are savvy, independent, skeptical and far more conservative than you might think

    It is a rite of passage: Grow old enough and you earn the privilege to stereotype the younger generation. Oh, the kids these days. When it comes to the current crop of people in their 20s and early 30s — the 77 million young Americans referred to as the millennials because they came of age after the turn of the century — the typecasting has proved no different. We have all heard the generalities: hooked on social media, distracted, spoiled. As is often the case in these situations, hardly any of it is true.

  • The Plight of the Rich: A study by the Cato Institute indicates that the richest families in America do not get endlessly richer

    The rich get richer.

    That is an American maxim. It is true of many societies around the world. I have long said that Americans like that we have a system skewed toward the rich because we all think we are going to hit the jackpot one day — and we want those tax-code goodies and upward wealth distribution mechanisms in place for us to benefit from when our lottery numbers hit the mega-millions.