Conventional wisdom has led most risk-averse investors to favor long duration, fixed-income bonds such as U.S. Treasury and corporate bonds. However as interest rates continue to rise, the values of these investment vehicles have nowhere to go but down. At Singer Xenos, we are very focused on alternative investment strategies that not only buffer against these types of pitfalls, but create new opportunities for growth.
Recently, I was invited to discuss this topic at the inaugural EisnerAmper Miami Private Wealth Forum, alongside a panel of experienced investors. Together we spoke about some of the top strategies for wealth building that we find most attractive in today’s highly fluid investment climate:
1. Catastrophe bonds: Catastrophe bonds transfer the risk of a specific disaster (such as a hurricane in Florida) from an insurance company to investors, and can be quite profitable in years where below average events occur.
2. Private lending notes: As the credit market continues to tighten, smaller businesses and individuals will rely more heavily on alternative lending from private financiers. Opportunistic investors can capitalize on this trend by purchasing privately financed notes and profiting from the interest.
3. Emerging market equities: We know that emerging market equities have the potential to outperform domestic stocks over the next few years. For the last five years, as the U.S. stock market continued to rally, emerging market stocks have been left behind. This leaves a valuation gap that we believe will narrow over time. However, investing wisely in these new frontiers requires specific in-market expertise, and is why we at Singer Xenos work closely with analysts who understand how each individual country works, their government structure and the companies within their jurisdictional control.
In general, panelists at the EisnerAmper Miami Private Wealth Forum were bullish on the macroeconomic outlook for the immediate future. Our consensus was that market fundamentals, including low unemployment and low interest rates (but rising), and a growing economy should help curb against any recessionary indicators over the next 12-18 months. While optimistic, we remain cautious and prepared to adapt our strategies once the economy inevitably slows down.
Neil Sosler, Partner & Senior Advisor
As a Certified Financial Planner™ and member of SX’s Investment Committee and Marketing Committee, Neil enjoys helping clients grow their assets, providing advice on key financial decisions and ensuring clients reach their financial goals.