1. Environmental and sustainable
investments
Far from being merely a “feel good” idea,
Dier says that environmental, social, and
corporate governance (ESG) issues can
have a real impact on portfolio performance.
In fact, about 140 pension plan
sponsors worldwide, including nine large
U.S. public funds, have made criteria for
responsible investing part of their standard
application process for investment
managers.
2. Activist strategies
Activist strategies aim to increase returns
by directly engaging corporate managers.
Dier says the goal is typically to work
with management to implement strategic,
operational, financial, or governance
improvements that will result in share price
appreciation. This approach is intensive,
but the rewards can be big: performance
expectations are typically 500 bps over
the index.
3. Hedge fund-of-funds
Hede funds can generate returns from a
wide range of investment styles with
names like conventional long equity, short
equity, global macro, relative value, and
event-driven. Dier likes hedge fund-offunds
because they combine multiple
styles in a single vehicle, raising the potential
for higher risk-adjusted returns and a low
correlation to traditional asset classes.
4. Infrastructure
Canadians have been hearing about
infrastructure for some time now, but
in the U.S., the idea of investing in critical
energy, transport, water, and social
resources is just starting to catch on, often
as a result of new privatization of governmental
entities. Dier says he’s looking at
investing directly in physical infrastructure
assets as a way to generate stable and
predictable cash flow that typically has
a built-in hedge against inflation.
5. Inflation protection
Inflation protection is a key theme for Dier,
especially as someone with responsibility
for the retirement finances of thousands
of New York City public servants. He sees
the potential for inflation protection in
commodities such as energy, as well as
Treasury Inflation-Protected Securities,
or “TIPS”, which are bonds that feature
a variable principle amount tied to the
Consumer Price Index.
Our view
Markets move fast, and the push to
innovate new strategies, new asset classes,
and new investment instruments moves
with nearly equal speed. In our experience,
investment trends that originate among
the most sophisticated institutional investors
eventually permeate the retail
mainstream. That means marketing and
sales teams across our industry can benefit
from being aware of these trends. // |
