Wealth Management
The drop in interest rates last month contributed to an over 3% rise in the FTSE Nareit All Equity REITs Index, continuing a strong upward trend since October 2023, pushing growth to nearly 40%. In the third quarter, the index saw a notable 16.8% return, outperforming broader stock indices.
Gains were broad, led by data centers, specialty, and office REITs, though residential REITs slightly declined. The shift in rates is also expected to bridge the gap between public and private real estate markets, potentially revitalizing commercial real estate investment.
Active REIT managers have adjusted sector allocations, with healthcare, data centers, and telecommunications seeing increased interest. With REITs benefiting from strong balance sheets and attractive debt rates, the outlook for continued growth and activity remains positive for the coming quarters.
Finsum: We think gains are more likely to be robust in residential REITs because they are less dependent on work policies and labor market conditions.
Large ski resorts offer a unique thrill, providing ample terrain for exploration that can keep even the most avid skier busy for days.
- Powder Mountain in Utah tops the list of North America's largest ski resorts, with over 8,000 skiable acres, though part of it is accessed by snow cats rather than chairlifts.
- Whistler Blackcomb in British Columbia follows closely with over 8,100 acres spread across two mountains, connected by the record-breaking Peak 2 Peak gondola.
- Park City Mountain Resort, Utah, offers the most lift-served terrain in the U.S., featuring 7,300 acres of slopes, and is easily accessible from Salt Lake City.
These vast resorts provide a mix of terrain and amenities, catering to both casual visitors and serious skiers alike. Whether for the sheer size or the diverse experiences, these resorts deliver unforgettable winter adventures.
Finsum: In the last few years we have seen the season start late but continue deep into the year, this could be a new trend in mountain sports!
A JPMorgan executive has downplayed the influence of the political pushback against environmental, social, and governance (ESG) issues in the U.S., stating that it has minimal impact on the country's green economy.
Chuka Umunna, JPMorgan’s head of sustainable solutions, explained that although discussions around sustainability have quieted, U.S. investors are still allocating capital in ways similar to their European counterparts. He stressed that despite the politicization of ESG, the underlying investment behavior remains largely the same, though the terminology may differ.
Umunna pointed out that while there has been an increase in anti-ESG resolutions, the vast majority failed to pass, with less than 2% succeeding. He added that the primary obstacles for U.S. businesses are more related to inflation, supply chain disruptions, and high interest rates than ESG challenges.
Finsum: While there is little doubt that ESG has slowed down, the long-term viability of these strategies is very clear
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Blackstone Inc. predicts the private credit market could expand to $30 trillion, driven by infrastructure financing and pensions. Currently, private debt stands at $1.7 trillion, primarily funding private equity, but Rob Horn, global head of infrastructure and asset-based credit at Blackstone, views this as just a fraction of the opportunity.
Private lenders are expected to take market share from banks, which now dominate the asset-based credit sector, with Blackstone focusing on areas like energy transition, digital infrastructure, and real estate.
Pension and sovereign wealth funds are also taking notice, potentially increasing their private debt allocations. Blackstone expects significant future growth in sectors like data centers, where investments could top $1 trillion over five years.
Finsum: While private equity has struggled to secure its footing in the same way private debt has, this expansion looks very stable.
On September 18, the Federal Reserve kicked off a new easing cycle by cutting interest rates by 50 basis points, its largest reduction in 16 years. However, instead of a smooth decline in bond yields, the 10-year Treasury yield actually rose afterward, highlighting the unpredictability of markets.
The Fed has made it clear that its strategy will be a gradual one, adjusting based on economic data, with a neutral policy stance likely to be reached by 2026. Other major central banks, such as the ECB and BOE, are also approaching rate cuts cautiously to curb inflationary pressures.
China, facing economic slowdowns, has continued cutting rates to spur growth in other sectors, despite ongoing issues in the property market.
Finsum: As global central banks navigate rate cuts, market volatility is expected, especially with geopolitical risks and upcoming elections contributing to uncertainty.
Private equity giants are increasingly turning to hands-on management of the companies they own as financial strategies alone are no longer sufficient. With rising interest rates and a slowdown in the deals market, firms like Goldman Sachs and Blackstone are bringing in seasoned industry veterans to boost operational performance.
This shift focuses on enhancing profitability through measures like improving margins and increasing cash flow, rather than relying on the traditional method of multiple expansion.
Private equity firms are also extending the holding periods of their investments, driven by the need to deliver returns to investors amidst a tougher economic climate. Companies are placing a stronger emphasis on building long-term strategic growth plans.
Finsum: As interest rates and inflation rise, private equity is evolving to emphasize deeper involvement in company operations rather than relying solely on financial solutions.