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U.S. Asset Manager CEOs Criticize Negative Interest Rates

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As the world economy continues to adjust and expand, asset managers are scratching their heads wondering if central banks went too far in driving into negative interest rate territory. Zero interest rate policy (ZIRP) and negative interest rate policy (NIRP) are central banking tools used to stimulate inflation. Simply put, negative interest rates transfer wealth from savers to borrows – a stealth tax on bank deposits. Six world central banks now have negative interest rates, including the Bank of Japan (BOJ), Sweden’s Riksbank and Swiss National Bank (SNB) have introduced negative interest rate policies in a bid to foster economic activity and raise inflation expectations. These central bankers want their domestic banks to lend more.

“The adoption of negative interest rates poses greater investment risk for asset owners with substantial liabilities, if pursued for the long-term. These policies are impacting the viability of savings institutions such as pensions and life insurers, who are now drifting more into illiquid assets and riskier investment strategies,” says Michael Maduell, President of SWFI.

Asset Manager CEOs Sound Off

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FIRRMA Bill is a Big Deal for Foreign Asset Owners

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The United States Treasury is analyzing options on further restricting investments into “sensitive” sectors, such as technology and defense, in the United States from Chinese state-owned capital. The U.S. Commerce Department, under the export control regime, banned U.S. companies from selling parts to ZTE Corporation, a Chinese telecommunications manufacturer, for seven years. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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AIMCo Posts 10.4% Return in 2017

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The Alberta Investment Management Corporation (AIMCo) posted its performance for the 12-month period trailing December 31, 2017, which saw its overall assets grow by 8.4% – or C$ 8.0 billion (US$ 6.1 billion) – to C$ 103.7 billion (US$ 82.3 billion). This represents returns net-of-fees on its C$ 88.2 billion (US$ 70.3 billion) worth of balanced fund investments in 2017 of 10.4%, against a 9.1% custom benchmark. Established in 2008, AIMCo represents the financial well-being of 32 pension, endowment, government, and specialty funds in the Canadian province of Alberta. This includes the Albert Heritage Fund.

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Mubadala Real Estate Targets JV Developers, Eyeing Local REIT Launch

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Mubadala Investment Company’s property arm is preparing to launch a local real estate investment trust (REIT) by 2020, and is currently in talks with several developers for international joint ventures on a plot-by-plot basis that are expected to be finalized in 2018, according to Ali Eid Al Mheiri, executive director of Mubadala Real Estate and Infrastructure. Ali Eid Al Mheiri is also Vice Chairman of ALDAR Properties PJSC and Chairman of Abu Dhabi Finance Company PJSC. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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