That is how many pounds our ice sculpture of NFL Commissioner Roger Goodell weighs. Preparing for the first outdoor cold-weather Super Bowl this weekend, our sports department is employing a creative method to help fans gauge how much they will need to bundle up. The more layers Mr. Goodell’s icy replica sheds, the more layers eventgoers can shed. You can follow the sculpture on Twitter @frozenroger.
(Source: Wall Street Journal)
Capitalization rates, used by real-estate investors to measure the annual return of income-producing properties, declined for many property types in 2013, according to data from Real Capital Analytics in New York. Meanwhile, the spread between cap rates and yields on 10-year Treasury notes narrowed. The average cap rate for all property types was 6.74% last year, down from 6.76% in 2012. Cap rates fell fastest for office buildings, which had an average cap rate of 6.93% in 2013 compared with 7.15% in 2012.
(Source: Wall Street Journal)
Equity valuations are still reasonable, especially when considering the inflation environment. Historically, inflation between 0%-2% (CPI is currently running at 1.2% year over year) has been a sweet spot for valuations. Even inflation readings up to 4% have been supportive for valuations. Concerns for multiples would arise if we see either deflation or inflation greater than 4%.
(Sources: Strategas Research Partners, LLC & Brinker Capital, Inc.)
U.S. banks cut a net 1,487 branch locations last year, according to SNL Financial, the most since the research firm began collecting the data in 2002.
(Source: Wall Street Journal)
234
Stockholders filed 234 federal securities class-action suits against U.S. companies last year, the most since 2008, according to a report by NERA Economic Consulting.
(Source: Wall Street Journal)
In the U.S., Netflix added 2.33 million streaming subscribers in the fourth quarter, sending its shares soaring.
(Source: Wall Street Journal)
More than 500,000 civilians in rebel-held areas around Damascus have been besieged for months by Syrian government forces, with little access to food and medicine, according to the United Nations, residents and opposition activists.
(Source: Wall Street Journal)
U.S. Congress has turned to a new chapter in its long-running battle over the federal budget, as the Senate on Thursday approved and sent to the White House a $1.012 trillion spending bill that keeps the government running through September.
(Source: Wall Street Journal)
Institutions Will Move out of Cash, Growing Role for Hedge Funds and Private Equity
Major institutional investors around the world are poised to increase their allocations to alternative investments, with a bias towards real estate and real assets, during 2014, according to a global survey of institutions conducted by BlackRock.
Approximately half of institutions surveyed– 49 percent – expect to increase their real estate allocation and over 40 percent indicated they will increase their investment in real assets this year. At the same time, about one-third of the institutional investors surveyed intend to reduce their cash holdings in 2014.
“Institutional investors are seeking to build portfolios better suited for an investment landscape characterized by low yields, sluggish growth, volatile markets, and rising correlation between stocks and bonds,” said Robert Goldstein, Senior Managing Director and head of BlackRock’s Institutional Client Business and BlackRock Solutions.
“Divergent economic and geopolitical conditions globally offer institutions a menu of real estate and real asset opportunities that meet a variety of investment objectives,” said Goldstein.
“In real estate, while core, income producing investments in developed markets are still in favor because of their liquidity and safe cash flows, we anticipate that institutions looking for income-producing alternatives will turn their attention to more opportunistic real estate investments outside their home markets,” said Goldstein.
“We’re also seeing a growing interest in infrastructure debt. These types of investments can potentially offer institutions high fixed yields, with stable cash flows and long duration.”
Seeking Out Better “Portfolio Buffers”
“The results of the survey likely reflect a recognition that, going forward, the portfolio diversification benefit traditionally offered by equities and bonds might be less powerful than in the past,” Goldstein said. “Indeed, the price correlation between US equities and bonds, which had been negative from 2009 through mid-2013, has been positive ever since then – suggesting that institutions definitely will be looking to other asset classes for more effective ‘portfolio buffers’ in coming months.”
A Growing Interest in Hedge Funds and Private Equity
“Within the alternatives category, we believe hedge funds and private equity also will command a growing role in institutional portfolios in 2014, with investors casting a wide net for appropriate diversification tools,” said Goldstein.
Nearly 30 percent of institutions surveyed intend to increase their hedge fund allocations this year.
In the Americas, over 40 percent of institutions are likely to increase their hedge fund allocation; none is planning a decrease. The trend is less true for EMEA, where 35 percent of institutions intend to allocate less to hedge funds and just 20 percent will allocate more.
Approximately one-third of institutions surveyed anticipate allocating more to private equity. Private equity is less popular with EMEA institutions and smaller investors (those with less than $20 billion in AUM), with these investors indicating they will either maintain or reduce current private equity allocations.
About the Survey
BlackRock surveyed approximately 100 institutional investors representing the firm’s Americas, Europe/Middle East/Africa (EMEA), and Asia-Pacific (APAC) markets, including corporate and private pension funds, insurers, investment managers, and government entities. In total, the investors surveyed represent more than $6 trillion in assets under management (AUM), with an average AUM of $70 billion.
About BlackRock
BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At December 31, 2013, BlackRock’s AUM was $4.324 trillion. BlackRock helps clients meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRockSolutions®. Headquartered in New York City, as of December 31, 2013, the firm had approximately 11,400 employees in more than 30 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the Company’s website at www.blackrock.com.
Disclaimer
This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. Investing in alternative investments involves higher risks than traditional investments and may not be suitable for all investors. Alternative investments may be highly leveraged and engage in speculative investment techniques, which an magnify the potential for investment loss or gain.
BlackRock® is a registered trademark of BlackRock, Inc. All other trademarks are the property of their respective owners.
