Institutional investors add risk assets back into portfolios, says study (Link)
A report by the International Forum of Sovereign Wealth Funds (IFSWF) and State Street found that investors have gradually deployed some of their accumulated cash and reduced fixed income positions to add exposure to risk assets, while financial markets rebounded during the pandemic.
Many are also adding to their exposure within private markets, with a particular focus on infrastructure and real estate, hastened by low real returns in public markets.
The research also found no evidence of asset bubble behavior. The study revealed that while discussions of asset bubbles remain topical and indicate heightened concern in the media, there is no evidence equity markets are currently in bubble territory. There is further room for institutional investors to add to positions in risk assets.
Institutional investors to put more money into alternatives and multi-Asset strategies (Link)
According to Nuveen's inaugural "Global Institutional Investor Study", the pandemic is causing many institutional investors to shift the assets in their portfolios to alternatives and multi-asset solutions. They are also seeking clarity on environmental, social, and governance (ESG) as an alpha driver.
Eighty-six percent of institutional investors currently invest in alternatives and, of those now invested, two-thirds plan to increase their allocations in 2021, said Nuveen, the $1.2 trillion investment manager of TIAA.
More than half (55%) of alternatives investors said they plan to make a strategic shift away from the public to private markets in the next 12 months.
Emerging countries need debt markets overhaul to attract green investors (Link)
Emerging markets (EM) are highly vulnerable to climate change and require significant amounts of foreign capital to fund transition, mitigation, and adaptation measures.
Although the green bond market is growing rapidly, EM is not capturing its share of the potential.
Unlike developed markets (DM), where there has been a surge in green-dedicated funds, very few such vehicles exist in EM. As such, there is little natural demand for green bonds at present. Moreover, most of the EM fixed income asset class is too volatile, illiquid and risky to attract capital from dedicated DM green managers.
Gold falters on brightening economic outlook (Link)
Bullion had its worst quarter since 2016 as optimism about the pace of economic rebound curtailed investors' appetite for safe-haven assets.
The gold market has lost its glint, dashing the hopes of people who predicted that lavish stimulus spending by central banks and governments would send bullion prices to new heights this year.
Gold futures on Wednesday closed their worst quarter since 2016, falling 9.5% to $1,713.80 a troy ounce.
The precious metal has suffered a reversal in fortunes since August, when prices closed at a record $2,069.40 a troy ounce. Gold has since dropped 17%. Forecasts of a rapid global economic expansion this year, powered by vaccinations and U.S. stimulus, have tarnished gold’s allure as a haven in uncertain times.
Altcoins move to new all-time highs while Bitcoin struggles below $60k (Link)
Bitcoin price might be pinned below $60,000, but that’s not stopping THORChain, Akropolis and Helium from chasing after new all-time highs.
Data shows that BTC has only closed Q2 in the red twice and both times the decline was less than 10%. If history repeats itself, Bitcoin investors may witness sharp gains in the next six months.
Altcoins have also participated in the current bull run and this has propelled the total crypto market capitalization to $1.99 trillion which is just short of the $2 trillion milestone.\
Tungsten Capital positions AI-powered fund as an alternative for fixed-income investors (Link)
Fifty percent of investors believe that government bonds have currently lost their function as a counterbalance to stocks and as a safe haven, according to a survey by investment company Tungsten Capital.
Many investors are assessing real assets such as real estate and precious metals, primarily gold, while others are increasing the proportion of equity in their portfolios.
To address this issue and provide a counterweight to stocks, Tungsten Capital offers a solution based on artificial intelligence (AI) that can serve as an alternative to bonds.
The short-term CTA Tungsten TRYCON AI Global Markets (ISIN: LU0451958309) can go both long and short in a multi-asset universe of 60 markets. While correlation of both real estate markets and common liquid alternatives with the European stock market is 0.8 and above, the quantitative fund seeks zero correlation with other asset classes.