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summits
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21-23 February 2010
The Ritz-Carlton, Amelia Island, FL, US |
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Interview
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The world may revolve around money, yet knowing when and where to invest is an art that even some of the most experienced investors have failed to master. What range of colors should alternative asset class investors set on their palette of investments to paint a masterpiece? Tommy Huie, President and Chief Investment Officer at the M&I Investment Management Corporation and a speaker at the marcus evans Alternative Investments North America Summit Spring 2010, taking place in Florida, February 21-23, shares his thoughts on future opportunities and recommendations on long-term investment strategies for Chief Investment Officers. What are the challenges facing institutional investors, who invest in alternatives asset classes? Tommy Huie: There are three key issues facing institutional investors today. Firstly, the amount of leverage alternative investment vehicles are bringing to their particular investment strategy. Secondly, the available liquidity, which has been a significant area of anxiety the last couple of years. Lastly, transparency and level of demand on the various holdings that the alternative investment vehicles are offering. What investment opportunities has the crisis created in the space of alternatives? Tommy Huie: Derivatives based vehicles, such as structured notes, are available to investors at this point. Although not typically considered an alternative investment, it is one of those cross-over vehicles that attract the same type of investors. There is the opportunity for some hedge funds to be created in a mutual fund format, which could give investors a liquid vehicle for participation. Also, some alternative investment management firms may become publicly traded, allowing investors to own these firms via common stock. There are also opportunities in commodities, as a short-term trading investment vehicle. Investment banks are now less likely to provide leverage to some investors; therefore well thought out strategies for a longer term horizon and reasonable return expectations are more attractive to investors. Modest leverage, lower expected volatility and perhaps lower return expectations will become more common. What would you recommend to those investing in the following areas: real estate, infrastructure, green technology, commodities, precious metals and distressed opportunities? Tommy Huie: There are always opportunities to be found in every category. You can always think of a few common stock investments, some debt investments in each of these areas, or direct investments related to precious metals for example. The question is how large is that opportunity? Is it large enough to attract investors to raise enough capital to make it worthwhile for an alternative investment vehicle? With real estate, there are some opportunities available for medium to long-term investors. It may be more of an income producing investment, as opposed to capital appreciation, which was the case in the last few years. The global stimulus programs are designed to pump more money into infrastructure, but that is now lower down on our list of attractive investments; there are complicating factors, such as politics, and in some of the less developed countries debt may limit some of those opportunities at today’s price levels for some investors. There is a lot of volatility in the green technology type of investments, including wind and solar energy, so investing into private equity related vehicles for those initiatives makes more sense. Given some of the fundamentals, gold has probably gone beyond our expectations and is more speculative driven at this point. Distressed securities had plenty of opportunities in the last several months. Some have already played out in terms of ‘easy money’, but on a lower scale with reasonable return expectations. There are still some reasonable gains to be made, particularly in fixed income. What are your projections for 2010? What developments do you expect or predict that could affect those investing in alternatives? Tommy Huie: From a regulatory standpoint, there will be increased scrutiny which will be helpful to most investors. Marginal strategies may fall by the wayside, as the demands on regulatory compliance creeps in and may perhaps not make it worth the effort. The large amount of cash on the sidelines will help foster more merger and acquisition activities, and there lies some of the arbitrage related strategies that will probably also start to kick in on the hedge fund side. We have already started seeing that, but I think it shall become more prominent. Fees in general are probably going to start going down with respect to what investment advisors are able to demand from their investors. That will help promote fundraising activity to some degree and get some of the cash from the sidelines back to work in alternative vehicles. Capital preservation related strategies involving less leverage are also going to be in great demand. What long-term strategies would you recommend to institutional investors investing in the alternative asset class? Tommy Huie: My recommendation is to have a diversified mix of strategies. Fund of funds vehicles certainly help in that regard, provided there is enough capital to afford the staff to look at multiple areas and types of vehicles. As stimulus programs unwind globally, we will start to see discrimination among some investment strategies which will show the benefits of diversification. It is hard to pin down a specific investment area which will be especially attractive, but being diversified minimizes the impact of the level of risk most investors take. Some of the governmental programs and liquidity facilities require a great deal of flexibility from the institutional investor, who needs to be able to adapt and identify where the next opportunities are. This once again highlights the value of active investment management. There are certainly opportunities to invest on a passive basis with lower fees but also lower information content, but I believe we are going to begin a period where active investment management is really going to shine through.
Sarin Kouyoumdjian-Gurunlian
This unique forum will take place at The Ritz-Carlton, Amelia Island, Florida, February 21-23, 2010. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The summit includes presentations on infrastructure investing, real estate, distressed investing, hedge funds, CleanTech and risk management. For more information please send an email to info@marcusevanscy.com or visit the event website. Please note that the summit is a closed business event and the number of participants strictly limited.
marcus evans Summits are high level business forums for the world’s leading decision-makers to meet, learn and discuss strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to individually tailor their schedules of keynote presentations, think tanks, seminars and one-on-one business meetings. For more information, please visit www.marcusevans.com. All rights reserved. The above content may be republished or reproduced – kindly inform us by sending an email to press@marcusevanscy.com. |
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