At present, the investment market is most concerned about how long inflation will last. Whether high inflation is transitional or persistent will affect the Fed's monetary policy and thus influence asset market trends. Xu Jiajie expects that the situation of low growth and low interest rates is expected to continue for a longer period of time. He believes that the risk of high inflation cannot be ignored. In the past, under the “three lows” market conditions of low growth, low inflation, and low interest rates, bonds could provide a good source of income, but if high inflation continues, it is necessary to seek sources of income other than bonds.
Wide choice of alternative investment types
Nuveen is one of the world's largest investment managers with a management of 1.2 trillion US dollars. In addition to traditional equity and debt investments, it is also involved in many alternative investments. According to Xu Jiajie's analysis, alternative investment includes all investment tools other than public stock and bond markets. In addition to real estate, infrastructure, agricultural land, etc., private equity and private equity credit are also alternative investments. Currently, Nuveen's alternative investments are concentrated in real estate, physical assets and private equity investments.
Nuveen is currently the world's fifth largest real estate asset management company, managing nearly 130 billion US dollars in real estate projects. It is also the world's largest agricultural land asset management company. It is located in the United States, Australia, Latin America and Europe. It also invests in infrastructure and woodland. And other items. In addition, after the 2008 financial tsunami, banks withdrew from the credit market of many small and medium-sized enterprises, which reduced their financing channels. However, Nuveen believes that there are still many high-quality companies among them, so they participate in the private equity and debt markets.
Real estate is believed to be one of the most familiar alternative investments. In fact, the wealth of many Asian investors also comes from real estate, so there is a huge demand for real estate investment in the region. However, due to the different economic, cultural, regulatory and other situations in different regions, real estate investment requires personal knowledge and investigation. Xu Jiajie revealed that the Nuveen team currently has nearly 600 experts looking for real estate investment opportunities in 30 cities around the world. He further explained that diversifying investment globally can better capture unique investment opportunities in various regions, such as investing in single-family houses in the United States and investing in industrial projects in Japan and South Korea
The three major non-traditional real estates have great potential.
Xu Jiajie revealed that alternative real estate currently accounts for about 10% of Nuveen's real estate assets, but the target proportion will increase to half in the future. He shared that Nuveen’s current investment in alternative real estate can be divided into three categories, including single-family housing, medical projects and data centers: “Take New York and San Francisco as examples. People aged 23 to 40 years old grow up. If you get married, you need more living space, plus you can work at home, so you can move to the suburbs to live. However, due to rising real estate prices, you may not be able to afford home ownership. Therefore, choosing to rent makes the rental market for single-family houses quite attractive."
Medical projects can be divided into life science research facilities and medical offices (Medical Office). Xu Jiajie pointed out that new technologies have brought many new drugs and vaccines, driving the demand for a large number of research facilities, and these facilities are different in design, use and space from general working spaces. For example, there are stricter requirements for the ventilation system, and higher rents can follow. In addition, because the admission fee is more expensive, and the risk of infection is avoided in the hospital under the new crown epidemic, more people choose outpatient clinics.
In addition, with the prevalence of smart phones, consumers need more data usage and storage, including e-commerce, which drives the demand for data centers. He added that the new crown epidemic is not to establish a new business model, but to accelerate the original development. Taking e-commerce as an example, he revealed that due to the stimulus of the new crown epidemic, the current global e-commerce profits have reached the level that Nuveen originally expected to reach in 2025.
Individual investors can also participate.
Xu Jiajie emphasizes the importance of professional teams in alternative investments: "Private equity and debt have no open market, and information is less transparent than public equity or debt. To obtain good projects, you must have a good relationship with brokers. It is more important to explore opportunities in person. In addition, it is important to note that alternative investments generally have low liquidity. For example, the entire property cannot be traded at any time like stocks. In other words, the investment cycle is often medium and long-term.”
Because alternative investments, especially real estate projects, use funds. Often more than tens of millions of dollars, the entry threshold is high, so the market is dominated by institutional investors. However, Nuveen, in cooperation with Altive and iCapital, has established a channel fund to reduce entry fees through technological innovation, which reduces the cost of investors and makes searching more efficient. Appropriate investment projects allow individual investors to make good use of alternative investments, make their portfolios more diversified, and have better wealth protection in a high-inflation market environment.
To visit:
- Nuveen is an investment management agency under the United States Teachers’ Pension Fund (TIAA) and one of the world’s largest investment managers, with assets under management reaching US$1.2 trillion by the end of 2020
- Bonds may not be suitable for high inflation and low interest rates, alternative investments provide additional sources of income
- In addition to traditional houses, offices, and shopping malls, there are investment opportunities for single-family houses, medical projects and data centers
- Through technological innovation, individual investors can also participate in alternative investments
Henry Chui's personal profile
Currently the Managing Director of Nuveen and Head of Private Wealth in Asia Pacific, based in Hong Kong and responsible for leading all wealth sales businesses in the Asia Pacific region, providing investment solutions for clients
-Before joining Nuveen, he worked at PIMCO and Invesco Asset Management Management company and Schroder investment management company work
-holds a bachelor's degree in commerce from the University of Toronto, and has a CFA qualification
(Information provided by the customer)