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4 Horrible Performing Investments for Institutional Investors in 2014

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ruble energy

As Santa Claus sprinkles down bow-tied gifts on U.S. stock market investors, not all was well for investors in 2014. The equity capital markets laid traps for institutional investors. At times, even the “smartest minds” in investing make serious errors when allocating assets. For example, the AllianceBernstein All Market Real Return Portfolio, which actively shifts in an array of real assets, posted a -11.66% year-to-date return from December 26th. The real return fund, having a high exposure to the energy sector, is managed by John Ruff who has co-authored articles in finance publications and holds pedigrees from top finance schools. No matter how much research is consumed, consultants and advisors hired, there are going to be times when institutional investors make lousy calls. Some investment strategies have performed abominably this year, costing investors significant losses.

Below, the SWFI editorial staff highlighted some really bad investments for 2014.

#4 Small-Cap Energy Funds

A large number of small-cap energy funds performed horribly in 2014, especially the funds heavily allocated to debt-laden junior energy companies. The shale boom opened up the credit valve for many of these junior energy companies. Some funds that suffered lousy performance were Fidelity Select Energy Service Portfolio, which if an investor allocated US$ 10,000 on January 1, 2014, they would have US$ 7,810 on December 21th. Another example is Schroder International Selection Fund. This fund invests in equity and equity-related securities in junior energy firms, posted a -33.1% year-to-date return from November 28, 2014. This is in a year where in six months, oil went from US$ 111 per barrel to US$ 59 per barrel.

Yet despite the bad news, energy private equity funds are raising massive amounts of money from institutional investors. Private equity firms like Warburg Pincus, KKR and the Carlyle Group raised energy-focused private equity funds attracting pension and sovereign wealth dollars.

#3 Crude Oil

For most of 2014, the price of crude oil has been slipping, being a boon for U.S. consumers. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Goldman Sachs Buys Weyerhaeuser Spin Off AM Unit from Lindsay Goldberg

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Increasingly, Goldman Sachs is buying up small alternative asset management groups across the United States. Goldman Sachs Asset Management (GSAM) is part of Goldman Sachs Group. GSAM inked a deal to purchase Aptitude Investment Management LP, a hedge fund-of-funds manager, from Lindsay Goldberg & Bessemer II AIV LP, a vehicle managed by Lindsay Goldberg. Aptitude Investment Management oversees around US$ 3.5 billion in discretionary assets. Aptitude Investment Management operates out of Seattle and Vancouver, British Columbia.

Before the creation of an in-house unit at Weyerhauser, Morgan Stanley was the sole investment manager of Weyerhauser’s retirement assets. Salim Shariff, formerly of Morgan Stanley Alternative Investment Partners, and Jeff Klein were hired as CIO and Deputy CIO of Weyerhaeuser Asset Management LLC in 2004. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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GIC Gets Exposure to Exchange Tower through Primewest Vehicle

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Singapore’s GIC Private Limited funded a deal through a fund to acquire the Exchange Tower in Perth. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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SWFI First Read, December 13, 2018

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Turkey Wealth Fund Could Tap Debt Markets in 2019

Turkiye Varlik Fonu or Turkey Wealth Fund could be issuing a large bond in 2019. The loan would most likely be short term in nature with a maturity of two years and be syndicated.

Rahm Emanuel Suggests Bonds to Help Support Chicago Pensions

The outgoing Chicago Mayor Rahm Emanuel revealed a plan on possibly issuing US$ 10 billion in bonds in funding Chicago’s underfunded pension funds. Chicago’s four pension funds have an average funding ratio of 26%. In March 2016, the Illinois Supreme Court ruled an earlier pension reform law effecting employees and laborers’ pension funds that was signed by then Illinois Governor Pat Quinn that the law was unconstitutional.

SoftBank and Alibaba Back PT Tokopedia

PT Tokopedia is an Indonesian generalist e-commerce site. Tokopedia raised US$ 1.1 billion in an investment round led by the SoftBank Vision Fund and Alibaba Group. Softbank Ventures Korea and other investors participated in the round as well. William Tanuwijaya is the CEO and Co-Founder of Tokopedia.

Tikehau Capital and Total SA Form Low Carbon Fund

Tikehau Capital and Total SA created a private equity fund to focus on supporting the energy transition to cleaner sources of energy. The fund held a €350 million first close and raised money from investors such as Bpifrance and Groupama as anchor investors.

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