Brief: Brookfield Asset Management Inc. said it raised a record $23 billion during the second quarter and expects to accelerate the pace of investments after the disruption caused by Covid-19. The Toronto-based alternative asset manager said it has $77 billion in cash, securities and other available capital, including uncalled capital commitments from clients. That figure includes $12 billion raised in its latest distressed debt fund by its Oaktree Capital Management unit. When that fund is closed, it should be the largest ever raised for distressed debt investing, Brookfield Chief Executive Officer Bruce Flatt said in a letter to shareholders. “While we do not expect full recovery of the global economy until well into 2021, we believe the worst is over, and our own businesses are slowly recovering,” said Flatt. “We have been keeping our powder dry, waiting for opportunities we believe will come.” Flatt said that while the quarter was busy for raising capital, its three flagship funds are now 50% committed and that the firm expects to start raising money again for their next vintages in 2021. “We are being patient with our capital, but we expect the pace of investment to increase over the next 12 months as opportunities present themselves,” Flatt said.
Brief: Some of Britain’s biggest financial and legal firms have stepped up support for staff and customers suffering domestic abuse after the coronavirus lockdown shed new light on the scale of a problem affecting millions nationwide. Legislation now progressing through parliament suggests this is costing Britain 66 billion pounds ($86 billion) a year, with official figures estimating around 2 million people, mainly women aged 16 to 74, suffer some form of domestic abuse. The Domestic Abuse Bill will introduce a statutory definition that includes physical violence but also emotional, coercive and economic abuse, after extensive lobbying by the charity Surviving Economic Abuse and the financial sector. As the coronavirus pandemic forces millions to work from home and calls to helplines surge, Lloyds Banking Group (LLOY.L) and NatWest Group NWG.L have teamed up with charities SafeLives and Surviving Economic Abuse to offer financial as well as practical aid to victims. And with remote working increasing social isolation, some firms are also striving to help staff.
Brief: State Street Global Advisors thinks that the economy can only outlast and outwit the new SARS coronavirus for so long. It’s going to take agreed-upon medical treatments greenlit by the FDA, or a vaccine, to put this pandemic to bed. “It will be challenging to sustain investor confidence through the end of the year unless (there is successful) development of a vaccine or an effective, scalable medical treatment...so that the most vulnerable populations can benefit by the end of 2020 or early 2021,” says State Street Global Advisors global CIO Richard Lacaille. “There will be no complete recovery without a medical solution to Covid-19.” He defines the recovery stages in three phases, with the first two all backstopped by unprecedented global stimulus from Treasury and central banks everywhere. We are now in phase two. For phase two to be successful, lockdowns have to be lifted, meaning restrictions have to be removed. The longer restrictions remain, the longer doubts remain; and the longer doubts remain, the less likely it is that businesses will rehire and reinvest. Foreign investors in the U.S. would also cash out if this continues.
Brief: An outdoor lunch meeting felt like a major event recently for venture capitalist and former endowment chief Carrie Thome, even though, as she joked, their only exposure was eye contact. Months in the pandemic, institutional asset management remains in effective lockdown. Consultants — perhaps the top road warriors of all — were banned from work travel by company edict as of mid-July, a sampling told Institutional Investor recently in a private poll. Two-thirds of pension funds, endowments, foundations, and other allocators’ offices remained totally closed. Even among those allowing some staff in, all but a handful had strict capacity restrictions in place. A few executives — those with keys and young families at home — have guilty confessed to sneaking into their officially shuttered offices, just to get some work done in the peace and quiet. “No one else is here… I had to get away from my kids,” one pension chief told II. “Plus my desk has multiple monitors set up, which really helps productivity.” And visits from outsiders? Forget about it. Just a single respondent — an allocator in the already-distanced state of Hawaii — said their office is open and, pending a temperature check, conducting in-person meetings. But nearly 90 percent of the 57 respondents couldn’t visit anyway: organizations banned work travel.
Brief: Covid-19 hasn’t dampened investors’ return expectations over the next five years, according to a global survey from New York–based Schroder Investment Management Ltd. The survey found that investors were expecting an average return of 10.9% over the next five years. Investors in the Americas had the highest expectations, predicting returns of 13.2%. Europeans were less optimistic, predicting returns of 9.4%. By country, investors in the U.S. were the most optimistic, expecting an average return of 15.4%, followed by investors in Indonesia (14.8%) and Argentina (14.6%). Japanese investors were the least optimistic, expecting an average return of 6%, followed by Swiss (7%) and Italian (7.9%) investors. Globally, investors didn’t appear particularly concerned about the lasting economic effects of Covid-19. Only 6% expected the economic impact of the virus to persist for more than four years, while 21% expected the impact to last more than two years. The pandemic did, however, cause many investors to make changes to their portfolios. Twenty-eight per cent said they made substantial changes, while 25% said they made some changes.
Brief: The coronavirus pandemic has led to an unprecedented slowdown in the global economy. The U.S. gross domestic product (GDP) fell by 33% on an annual basis in the second quarter, more than triple its previous worst quarter. The eurozone fared even worse: Its GDP contracted by 40% on an annual basis during the second quarter. In the midst of this global slowdown and ongoing geopolitical uncertainty, the alternative assets industry remains healthy. Yield-hungry investors are continuing to pour capital into alternatives with assets under management now exceeding $10 trillion according to Preqin, the alternative assets industry's foremost provider of financial data and analytics. In a survey conducted last November by Preqin, the majority of alternative asset investors said they were satisfied with their portfolio’s performance last year. Nine out of 10 (87%) private equity (PE) investors said their investments met or exceeded their return expectations last year. About the same percentage (86%) of PE investors said they intend to commit at least the same amount of capital to PE this year as they did last year.