Today’s complex maze of financial instruments presents institutional investors with a true challenge: How to increase return on equity (ROE) for their primary asset—the client. Individual alpha investors face the same question when building their own portfolios.
- Price volatility in mainstream asset classes
- Unusually high positive correlations between traditional asset classes and their subcomponents
- Uncertainties over valuations due to low levels of visibility regarding the global economy
- Concerns over inflation in light of large-scale quantitative easing in many economies
- Inflation outstripping central bank interest rates
- “Real” or “hard” assets that better protect principal
- Simple, secure and transparent investment structures, preferably involving direct ownership of the underlying asset
- Bigger returns than traditional fixed-income strategies offer as a way to replace lost “risk-free” income
- Low or negative correlation to traditional asset classes such as stocks and bonds and mainstream alternative investments such as commercial real estate and hedge funds
- Superior performance in an inflationary environment (to mitigate inflationary risks from low interest rates, quantitative easing, commodity-driven inflation, etc.)
- Good long-term fundamentals to support capital growth in an investment environment in which short-term visibility is at historic lows
Land equity has the potential to provide all of the above benefits.