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SWFI Survey: Large Long-Term Asset Owners Cool on Listed Infrastructure

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Sovereign wealth funds, public pensions, endowments and other asset owners have steadily increased allocation to infrastructure over the past six years, according to asset allocation data from SWFI. However, hundreds of billions of capital allocated to infrastructure remain idle. According to the third quarter 2017 Global Asset Owner Survey conducted by SWFI, a large number of respondents plan to underweight listed infrastructure in the next 12 months. Just about 92% of the respondents plan to either underweight, strongly underweight or hold their allocation to listed infrastructure, while the survey showed a desire for private infrastructure investing. The debate over public or private access to infrastructure remains a bit intense.

Given the recent quarterly survey demographics, SWFI concludes that more long-term institutional investors with access to talent and sizeable balance sheets prefer private infrastructure investing over listed infrastructure allocations at the moment. A possible concern for listed infrastructure are its correlations to U.S. equity markets, versus the pure play of infrastructure exposure, even when suitable deals are hard to find. Historically, listed infrastructure has exhibited equity-like returns, which can be a pro or con, depending on one’s portfolio preferences.

StepStone Group Quits CalPERS Infrastructure Role

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China and Russia Buy Up More Physical Gold

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The worst fears of the Federal Reserve may be coming true. The barbarous relic is once again offering some resistance to Fed policy as it maintains its uptrend from mid-November, and is being snapped up from central banks worldwide. Former Fed chairman Paul Volcker shared the central bank view that “Gold was the enemy.” If so, the enemy is gaining ground. China’s gold reserves quietly grew from December 2018 to February 2019. The People’s Bank of China disclosed in February 2019 that it increased its gold reserves by 10 tonnes that month, following purchases of 11.8 tonnes in January 2019, and 9.95 tonnes in December 2018. Goldman Sachs has listed central bank purchasing as the reason for the uptrend. Goldman Sachs expects to see gold at US$ 1,400 over the next six months, which would lift it well above its long-held resistance at US$ 1,350. China’s gold holdings are now US$ 79.5 billion. China, which is emphasizing diversification from the U.S. dollar, has been a fan of precious metals for years, and it has been encouraging its citizens to purchase gold and silver for a decade, when previous controls on precious metals were done away with. Now anyone in China can trade gold internationally with the swipe of a card.

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AP1 Selects Approved Managers for Emerging Market Equities Mandate

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Sweden’s AP1 chose 14 external fund managers for its 45.3 billion SEK allocation to emerging market equities. These are approved managers for AP1, but not all of them will manage money for this mandate.

The managers selected are:
Aberdeen Standard Investments
BlackRock
First State Investments
Fisher Asset Management (Fisher Investments)
GMO
GQG Partners
JP Morgan Asset Management
KBI Global Investors
Legal & General Investment Management
RBC Global Asset Management (part of Royal Bank of Canada)
Robeco
TOBAM
UBS Asset Management
Wellington Management

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SWFI First Read, March 20, 2019

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Bentall Kennedy Buys Stockton Logistics Center

Bentall Kennedy, through a U.S. fund it manages, acquired a NorCal Logistics Center in California for US$ 105 million. The property is located at: 4611 Newcastle Rd, Stockton, CA 95215.

Point Raises $122 Million

Point is a company that provides shared home equity financing. Point raised US$ 122 million in funding in an investment round led by Prudential Financial and DAG Ventures. Other investors in the round include Andreessen Horowitz, Ribbit Capital, Bloomberg Beta, Financial Venture Studio, and Enterprise Community Partners.

FBI Probes Boeing over 737 MAX

The Seattle Times reports the U.S. Federal Bureau of Investigation (FBI) is conducting a criminal probe into the Boeing 737 Max. Part of the probe includes whether Boeing staff had unduly influence and possible kickbacks to government officials at the Federal Aviation Administration (FAA).

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