Growing Energy and Natural Resource Allocation for Public Investors

energy_natTechnological improvements and efficiencies in crude oil production have elevated projected U.S. supplies of oil. With regard to natural gas, prices of the commodity are relatively low. Surges in industrial and electric power sectors have augmented the need for growing shale gas production. With the United States embarking on a fossil fuel extraction renaissance, how have public investors reacted?

Real assets in the domain of energy and natural resource investments have tagged the interest of public pensions and sovereign wealth funds. From a portfolio perspective, institutional investors seek to neutralize inflation sensitivities, especially if a deflationary spike approaches. A major deflationary event risk could always occur; however, the chances appear relatively slim for now. For example, U.S. financial institutions have re-equitized their balance sheets and shed off riskier units. Hedge funds are being spun-off. The Federal Reserve has added a ton of liquidity into the markets through various policies and actions.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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