Investment Insights

New York City's pension funds are setting a remarkable precedent by increasing their investment in emerging managers, particularly those owned by minorities and women. This strategic shift follows an impressive track record of emerging managers outperforming traditional benchmarks across various asset classes since 2015.

In the quest for attractive yields, investors often find themselves exploring the niche world of private credit. Within this space, emerging managers, or small and new firms, often promise enticing opportunities. However, while the allure of diversification and the prospect of high returns are tempting, it is critical to assess the risks these investments carry.

In the realm of investment management, the due diligence process plays a paramount role in identifying competent and reliable emerging managers. We believe that a team's combined experience and cohesion largely determine its potential to successfully manage assets and mitigate risks.

One of the primary challenges for emerging investment managers is to establish credibility and build trust with potential investors. With limited track records and resources, these managers must find innovative ways to showcase their expertise and differentiate themselves from established players.

Frequently Asked Questions about Ashton Global Emerging Managers (AGEM). We aim to address some of the commonly asked questions regarding the seed capital application process. Generally, our transactions involve permanent capital for the emerging manager.

Starting an investment fund can be an intense and arduous process. Emerging managers can face a steep learning curve when it comes to navigating relationships with investors, particularly family offices. While family offices can be valuable partners, understanding their priorities and investment goals can be challenging. 

Investing in emerging managers can provide diversification benefits to an investment portfolio. By adding emerging managers to an investment allocation, investors gain access to a broader range of investment styles and asset classes, potentially reducing portfolio risk and increasing the likelihood of generating uncorrelated returns.

Emerging managers are typically less established and have smaller assets under management than their larger counterparts. This makes them more agile, adaptable, and nimble, allowing them to pivot quickly in response to market changes. Family offices appreciate such flexibility, as they are often more willing to take on risks when presented with unique investment opportunities. 

Timberland is popular for investors looking to diversify their portfolio and it is typically resilient against inflation, due to the stable demand for timber in construction, and the ability of trees to continue growing and gaining value even when harvests are delayed. The global market for saw timber and solid wood product has remained stable even after years of pandemic and major supply chain disruptions. 

The turbulent new issue markets are prompting borrowers to pay a premium for certainty of execution in private markets, thereby expanding the opportunity set for investors as larger private credit funds enhance their capacity to underwrite bigger deals.

The structure, risk, and return on green bonds are much like those of traditional bonds. However, these types of bonds are aimed at promoting energy efficiency, pollution prevention, sustainable agriculture, fishery and forestry, the protection of aquatic and terrestrial ecosystems, clean transportation, and water.

Emerging fund managers can indeed be seen as hidden gems in the investment landscape. Their leaner structure and need to differentiate often lead to innovative and more niche investment strategies. This novel approach allows them to exploit inefficiencies and opportunities that more substantial, less flexible entities might miss.

Emerging managers must provide investment opportunities that are clearly differentiated from well-established funds. Institutional investors and high-net-worth individuals diligently search for alternative investments that can produce genuinely different patterns of returns.

An estimated $5.5 trillion of incremental investments will be required by 2050 to achieve net-zero emissions, with $1.6 trillion needed for the energy transition. Median returns for cleantech venture funds have been strong with energy optimization, electric mobility, and energy storage leading the way.

Investor interest has been focused on real estate with the recent surge in inflation. For real estate to be a good inflation hedge, the increase in cashflows must outweigh the rise in operating costs by at least the rate of inflation. We think opportunistic real estate could provide good risk-adjusted returns.

Building infrastructure often requires the investment of substantial amounts of money over long periods, which makes pursuing socially responsible and sustainable development more vital. 

Returns from litigation finance have been high and uncorrelated with the broader market and other asset classes. The returns for litigation finance depend on the outcomes of particular court cases, which are unaffected by movements in the stock market.

Roughly 10% of global car sales are electric, and we expect 30% growth over the next three to five years. However, we acknowledge the risks for investors in the space and we think that charging infrastructure and batteries are the best risk-adjusted ways to invest in electric vehicles.

Institutional investors and high-net-worth individuals diligently search for alternative investments that can produce genuinely different patterns of returns. Emerging managers must pursue profitable niches, new technologies, and financial arrangements that are not accessible in public markets.

We believe that the Russian economy and stock market, which is highly fossil fuel and resource dependent, should not have passed basic ESG screening criteria. The country has high levels of corporate and political corruption, and the linkages between the government and the oligarchs further increases the risk for investors.

The most common transactions in India's venture debt market are revolving credit facilities, revenue-linked loans, accounts receivables factoring, and equipment financing. The loans are typically short-term, with returns ranging from 10% to 18% depending on the sector and the borrower.