October 2024
WELCOME TO OUR MONTHLY NEWSLETTER.
Designed to serve as your primary source for navigating the world of alternative investments.
Event-Driven Strategies Eyeing an Improving Deal Environment
We’ve been incrementally constructive on event-driven strategies, given the potential political catalysts and improving merger and acquisition environment heading into 2025. In fact, the HFRI Event-Driven Index experienced a strong third quarter, up 4.9%, compared to the HFRI Fund Weighted Composite Index, 0.7%. (1)
Event-driven strategies are among the most flexible and dynamic approaches employed by top-tier hedge fund managers across both the equity and credit markets. These strategies look to capture pricing inefficiencies that occur as a result of specific corporate events, which may include mergers, acquisitions, bankruptcies, restructurings, spin-offs, management changes, or other significant business or regulatory developments.
Funds that invest across the capital structure remain well positioned to take advantage of special situations in both equities and credit. Additionally, managers who can create their own catalysts (e.g., shareholder activism, capital solutions, and restructurings) are likely to have an advantage if capital markets remain constrained – one reason event-driven funds have been among the top-performing hedge fund strategies over the longer term.
Yet the largest catalyst for event-driven funds likely rests with a sustainable uptick in M&A. While early indications from third-quarter bank earnings suggest pipelines are healthy, the potential for easing of the regulatory scrutiny of transactions could provide a more abundant backdrop for event-driven opportunities.
To learn more, please contact our sales team ([email protected] ) or login to iCapital Marketplace .
Chart of the Month
Event-Driven Hedge Funds vs. Global Stocks and Global Bonds
Event-driven strategies have historically delivered healthy risk-adjusted returns.
Source: eVestment; iCapital calculations. Period from Jan 1990 to August 2024. Event-Driven HFs represents HFRI Event-Driven Total Index, Global Stocks represents MSCI World Index, Global Bonds represents Bloomberg Global Aggregate Index. (2)?
New from iCapital
Webinar: Tax Benefits of 1031 Exchanges and Opportunity Zones
Investors with capital gains have unique options when seeking strategies to manage their tax liabilities. Several investment strategies are structured to utilize IRS tax codes that can potentially provide tax benefits related to these capital gains.
Join iCapital’s James Costabile , Managing Director, Head of Alternative Investment Distribution and special guests, Jill Mozer, Partner, Head of Real Estate Exchange, Ares, and Nick Rosenthal, Co-Chief Executive Officer, Griffin Capital, as they cover these investment strategy fundamentals and discuss the importance of financial planning, tax planning, and investment diversification.
Click here to register.
Introducing: Multi-Investment Workflow
Built to simplify the investment process for wealth managers, this new feature allows you to invest in one or multiple funds with just a few clicks. Simply identify the desired fund(s) and investment allocation(s), and the multi-investment workflow will guide you through an efficient, easy-to-follow investment experience.
View the press release.
Beyond 60/40
Global Alternative Investing
Watch this episode for an international look at private markets with guests from across the globe, including Mathieu Chabran, Co-Founder of Tikehau Capital and Vanda de Jesus , Managing Director & Head of Country Portugal, at iCapital.
Click here to watch now .
Commercial Real Estate and Defined Outcome Investing
Ben Brown,?Managing Partner,?Head of the Americas,?at Brookfield Asset Management Real Estate Group joins as a guest to discuss potential returns in real estate based on the current environment.
Click here to watch now .
Market Pulse
Heading to the Polls
The U.S. Presidential election is less than two weeks away. While some markets are starting to price in an outcome, uncertainty remains high. Headlines are focused on risk, but the economy remains resilient, and the S&P 500 seems to be on a path towards 6,000. Although policy is still to be determined, markets typically perform well in the year following the election. We think there could be an opportunity to add to equity risk and rebuild any allocations de-risked ahead of the election.
Learn more in the Market Pulse with Chief Investment Strategist Anastasia Amoroso .
Monthly Market Roundup
Did you know that 80% of surveyed advisors believe private market investments help attract new clients? (3) Explore results from Blackstone’s recent survey to learn how your peers view private markets.
In this report, Blue Owl leaders check in on the key themes and opportunities identified in early 2024 across Credit, GP Strategic Capital, and Real Estate and offer insights on the current market environment.?
From its modest beginning as an acquisition strategy largely known as ‘boot strapping’ in the late 1970s, the alternatives industry today is expected to grow to more than $24 trillion in assets in 2028 from $15 trillion in 2022. But sharpening one’s understanding of portfolio construction with and without alternatives, as well as across the different categories of such investments, is increasingly essential to delivering robust performance outcomes in the years ahead. Learn why KKR believes that understanding the past and the present is key to forming a proper ‘Alternative Perspective’ for the future.
In Case You Missed It
Alternative Allocations Podcast
Nick Veronis , Co-Founder & Managing Partner, Head of Portfolio Management at iCapital joined Tony Davidow in episode 15 of the Alternative Allocations podcast series to discuss the evolution of alternative investments solely being available to institutions to now becoming more accessible to the wealth channel. They delve into the changes in product structures, the introduction of technology to simplify operations, and the emergence of educational opportunities to help advisors understand the role alts play in client portfolios.
Listen here , and get Tony's breakdown of the podcast here .
Is $500 Billion in Annuity Sales on the Horizon?
After almost 20 years of stagnant growth, annuity sales topped $300 billion for the first time in 2022 and have been hitting record highs since. This article explores the potential for annuity sales to hit $500 billion soon considering the impact of interest rate changes and the evolving mix of annuity products, as well as the industry’s readiness to handle a potential influx in annuity contracts.
Click here to read more .
Important Information / Disclaimer
(1) Source: HFRI, calendar third quarter ended Sept. 30, 2024. Data as of Oct. 14, 2024.
(2) Index Definitions:
HFRI Event-Driven Total Index: Investment Managers who maintain positions in companies currently or prospectively involved in corporate transactions of a wide variety including but not limited to mergers, restructurings, financial distress, tender offers, shareholder buybacks, debt exchanges, security issuance or other capital structure adjustments. Security types can range from most senior in the capital structure to most junior or subordinated, and frequently involve additional derivative securities. Event Driven exposure includes a combination of sensitivities to equity markets, credit markets and idiosyncratic, company specific developments.
MSCI World Index:?Captures large and mid-cap representation across 23 Developed Markets (DM) countries. With 1,633 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.
Bloomberg Global?Aggregate Index:?A flagship measure of global investment grade debt from a multitude of local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers.
(3) Based on surveys of financial professionals across the U.S., EMEA, and APAC participating in Blackstone programming over the period July-September 2024. Average number of respondents per question: 525. Any views or opinions expressed herein reflect solely the views of the advisors who were surveyed in connection with this survey and/or Blackstone, and such views or opinions are subject to change without notice and may differ from opinions expressed by others. Blackstone has not independently verified the information received from the advisors surveyed and no representation is made as to the accuracy of such information. Any projections, expectations or other forward-looking statements set forth herein are based on assumptions that are uncertain and are subject to many factors, changing market conditions and general economic conditions, and may vary materially from the themes set forth herein. Nothing herein constitutes investment advice or recommendations, and this summary page should not be relied upon as a basis for making an investment decision.
The material herein has been provided to you for informational purposes only by Institutional Capital Network, Inc. (“iCapital Network”) or one of its affiliates (iCapital Network together with its affiliates, “iCapital”). This material is the property of iCapital and may not be shared without the written permission of iCapital. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of iCapital.
This material is provided for informational purposes only and is not intended as, and may not be relied on in any manner as, legal, tax or investment advice, a recommendation, or as an offer or solicitation to buy or sell any security, financial product or instrument, or otherwise to participate in any particular trading strategy. This material does not intend to address the financial objectives, situation, or specific needs of any individual investor. You should consult your personal accounting, tax and legal advisors to understand the implications of any investment specific to your personal financial situation.
ALTERNATIVE INVESTMENTS ARE CONSIDERED COMPLEX PRODUCTS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. Prospective investors should be aware that an investment in an alternative investment is speculative and involves a high degree of risk. Alternative Investments often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; can be highly illiquid; may not be required to provide periodic pricing or valuation information to investors; may involve complex tax structures and delays in distributing important tax information; are not subject to the same regulatory requirements as mutual funds; and often charge high fees. There is no guarantee that an alternative investment will implement its investment strategy and/or achieve its objectives, generate profits, or avoid loss. An investment should only be considered by sophisticated investors who can afford to lose all or a substantial amount of their investment.
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The information contained herein is an opinion only, as of the date indicated, and should not be relied upon as the only important information available. Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance. The information contained herein is subject to change, incomplete, and may include information and/or data obtained from third party sources that iCapital believes, but does not guarantee, to be accurate. iCapital considers this third-party data reliable, but does not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. iCapital makes no representation as to the accuracy or completeness of this material and accepts no liability for losses arising from the use of the material presented. No representation or warranty is made by iCapital as to the reasonableness or completeness of such forward-looking statements or to any other financial information contained herein.
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Another great 60/40 series this month. A special thank you to our partners at Brookfield Asset Management for a great discussion on the real estate market.