Next Generation Debt and Income Strategies

“By 2017 next generation debt strategies will represent nearly 80% of the annual revenue created by fixed income mandates from U.S. investors.” (Source: When the Tide Turns: Building Next Generation Fixed Income Managers, by Casey Quirk, May 2013)

With investors facing uncertainty in the bond markets, fixed income alternatives are seen as a necessity to protect funding ratios. Are you prepared for this shift in your debt portfolio? Do you have the specific strategies you need and the in-depth investment know-how to successfully invest in higher-risk fixed income alternatives

Casey Quirk_When The Tide Turns_May_2013.pdf

I see hybrid property/income strategies or private equity driven infrastructure income funds coming in to fill this gap.

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Posted by on April 15, 2014 in Investments


US citizens, here’s where your tax dollars went

Still think you’re living in a competitive environment based on fair capitalist fundamentals ? Mmmmmm ….. Looks more like a socialist system with top heavy pay to play government that buys it’s votes with 90% of the budget above. You can see why our crumbling infrastructure is starting to make us look like a 3rd world country. You can see why our school kids are lagging behind global standards. Did you realize that small businesses spend about 4 – 6 weeks of the entire year just dedicated to complying with and completing the red tape requirements for your various government filings ? Rome 2.0

Some gentle reminders below

“To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.” Thomas Jefferson

The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance. By Marcus Tullius Cicero , 55 BC

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Posted by on April 15, 2014 in Investments


Get water-wise, here’s a good place to start

Anric Blatt, Global Fund Exchange Group
+12125707970 Ext. 8

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Posted by on April 15, 2014 in Investments


Confused ? read this then

Direct quote from a friend in our business that writes one of the best weekly news pieces …..

“It’s so much nonsense that I can’t believe anybody really believes it,” announced Cheniere Energy’s CEO. And of course, he’s right. Everything’s nonsense. In Cheniere’s case, the CEO responded to claims that US natural gas will loosen Putin’s tightening grip on Europe. Cheniere’s Louisiana LNG terminal will export its first cargo in late 2015. It’ll ship 2.2bln cubic feet/day (Europe consumes 40-50bln).

Anyhow, having borrowed $2trln and sacrificed 4,486 of our brave soldiers to liberate Iraq, Shiite leaders advanced legislation enshrining Iraqi men’s inalienable right to legally rape their wives and marry off their baby daughters. Can you believe it?

And can you believe that 5yrs into a recovery, with rates at zero, unemployment at 6.7%, and the Fed committed to exiting QE, the US yield curve is bull flattening with 30yr yields dropping below 3.50%? Or that America, having devalued the dollar to dig out from under our debt pile, warned China to not devalue, just as Beijing confronts an even larger pile? Or that as prospects for a July Iranian nuclear deal look brightest, oil hit $104/barrel?

And can you believe 2yrs after receiving E200bln that’ll they’ll never repay, just extend and pretend, Greece issued E3bln of 5yr debt at 4.95%?

Or that Flight 370 remains lost?

That Blade Runner claims his innocence?

And can you believe Japanese stocks plunged 7.3% while Chinese stocks surged 3.5%? That the Nasdaq tanked 3.1%, while Brazil jumped 1.5%?

Almost appears the safest markets are those with the biggest problems, but room to ease. Can you believe it?

And can you believe the global standard for internet encryption contains a bug that allows criminals and terrorists to steal our most sensitive information? And can you believe the NSA knew, and instead of protecting us, used it to spy on us? Makes your heart bleed. Can you believe it? What nonsense.

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Posted by on April 14, 2014 in Investments


Famine and Water Riots Are Coming, Warns New IPCC Intergovernmental Report

The Intergovernmental Panel on Climate Change (IPCC) has released a new report on the state of the global environment. One of their most important messages is that we need to prepare for famines and water shortages in the coming decades.

Photo, above, of California’s low water levels due to drought this year, by Randall Benton, Sacramento Bee.

The Guardian‘s John Abraham and Dana Nuccitelli have a great guide to the report. They write:

The report discusses the risk associated with food insecurity due to more intense droughts, floods, and heat waves in a warmer world, especially for poorer countries. This contradicts the claims of climate contrarians like Matt Ridley, who have tried to claim that rising carbon dioxide levels are good for crops.

While rising carbon dioxide levels have led to ‘global greening’ in past decades and improved agricultural technology has increased crop yields, research has indicated that both of these trends are already beginning to reverse. While plants like carbon dioxide, they don’t like heat waves, droughts, and floods. Likewise, economist Richard Tol has argued that farmers can adapt to climate change, but adaptation has its costs and its limits. In fact, the IPCC summary report notes that most studies project a decline in crop yields starting in 2030, even as global food demand continues to rise.

The report also discusses risks associated with water insecurity, due for example to shrinking of glaciers that act as key water resources for various regions around the world, and through changing precipitation patterns. As a result of these types of changes, the IPCC also anticipates that violent conflicts like civil wars will become more common.

Here’s a chart from the report tracking likely decreases in crop yields over time, if climate change continues unchecked.

Essentially, climate change is going to decrease our supply of food and water. And this, the IPCC suggests, will foment civil unrest and could lead to more armed conflicts than we have now.

Other looming threats include greater risks of flooding, ocean acidification, and animal extinctions.

It seems clear that mitigating climate change doesn’t simply mean curbing our fossil fuel emissions and agricultural runoff into the oceans. We’re also going to need to figure out new ways to improve our food and water security. Perhaps the breakthrough technologies of the twenty-first century will involve genetic tweaks that make plants more resistant to drought, and cheap ways to recycle or purify water.

If we can’t agree on what to do about climate change, one has to hope that we can unify around what to do about hunger and thirst.

Read the entire IPCC report [PDF]


Suit Jacket Buttoning Rules

Useful or not ? Click the like button so I know what you think. Thanks

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Posted by on April 11, 2014 in Investments


Examining Companies Through the Lens of ESG by Mark Mobius

Examining Companies Through the Lens of ESG
April 3, 2014

This post is also available in: French, German

No matter where we invest, there’s always some sort of risk. This includes not only geopolitical or macroeconomic factors in a given country, but also issues that are unique to a specific sector or individual security. As bottom-up stock pickers, my team and I must assess the potential risks and returns related to each and every company we invest in. One area that warrants closer examination is environmental, social, and governance (ESG) risks and opportunities, which can play a big role in our stock selection and valuation process.

As part of our research process, the Templeton Emerging Markets Group evaluates a company’s market opportunity, competitive position, management strength, financial profitability and valuation. ESG issues can influence several of these factors. ESG does not typically incorporate strict screens that would automatically exclude any particular investment. Issues are considered if and when they impact the risk and return profile of an investment opportunity, similar to other company or industry investment considerations such as future growth prospects and market demand.

What might these ESG issues be? They might include natural resource scarcity, hazardous waste disposal, product safety, employee health and safety practices, or shareholder rights, to name a few.

Some of the overall aspects we evaluate when analyzing individual companies include quality of company management, corporate governance, competitive position relative to peers, ownership structure and commitment to creating shareholder value. These dovetail with ESG factors. Our analysts typically conduct some 2,500 to 3,000 research meetings every year, meeting with company management, touring facilities, and meeting suppliers, clients and competitors. These meetings allow us to look at a company from many different perspectives and provide both broader and more detailed information across many factors (including ESG) which may otherwise not be captured.

In emerging markets, regulation and enforcement of issues pertaining to corruption, corporate governance, the environment and other social issues may be still evolving. However, as a country develops, generally these safeguards tend to become both more comprehensive and more stringently enforced. Thus, we believe companies with strong records of governance today (which can impact management of environmental and social issues) may be better prepared for the future, and thus, may provide a better investment case. For example, in our view, a company with inadequate environmental policies not only reflects badly on existing corporate governance, it may also bode poorly for the future competitiveness of that company.

Given the importance of corporate governance in evaluating investment opportunities, one of the key aspects we look for in company management is a strong culture and history of ethical business conduct. We conduct analyses of ownership structures, the management team’s track record, the company’s corporate governance history and its commitment to creating shareholder value. Additionally, we look for managers who know the business well, with experience in a given field, who are properly motivated through incentives such as stock options on company shares. We also pay attention to management’s ability to cope with a rapidly changing business environment. For example, in Thailand during the mid-to-late 1990s, when markets crashed and investor confidence was bleak, we could see the importance of strong company management and the steps these companies took to survive the crisis.

As part of our research process, we pay close attention to potential corporate governance concerns, and will not hesitate to actively oppose management at times if it is in the best interests of our investments. Not only do we take a proactive approach to monitoring corporate governance practices, we also scrutinize issues including the relationship between a company and its auditor, and related-party transactions, as these matters can uncover potential poor corporate governance practices.

Quality of management is a key consideration for us, as incompetence can potentially be extremely damaging. Accordingly, when researching a company, we seek not only to meet with management and tour facilities, but we also try to meet with competitors, suppliers, customers and regulators. The information gleaned from these meetings can be crucial in understanding the company and its management quality. For example, a business regularly in arrears with its suppliers may have poor cash flow management.

Risks are everywhere and in many forms, but with proper examination, knowledge and a broad team research effort, we can better determine which we think are worth taking—and which are not.

Dr. Mobius’ comments, opinions and analyses are for informational purposes only and should not be considered individual investment advice or a recommendation to invest in any security or to adopt any investment strategy. Because market and economic conditions are subject to rapid change, comments, opinions and analyses are rendered as of the date of the posting and may change without notice. This material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy.

All investments involve risks, including possible loss of principal. Foreign securities involve special risks, including currency fluctuations and economic and political uncertainties. Investments in emerging markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Because these frameworks are typically even less developed in frontier markets, as well as various factors including the increased potential for extreme price volatility, illiquidity, trade barriers and exchange controls, the risks associated with emerging markets are magnified in frontier markets.

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Posted by on April 9, 2014 in Investments


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