Trends Watch: February 2, 2017

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies Snyderman.  

This week, Elana talks to Gravelle Pierre, Chief Investment Officer, Iron Harbor Capital Management.

What is your outlook for the alternative investment industry?

I believe that the alternative investments space is entering a period of renewed interest from a broad class of investors. With traditional assets very likely overvalued, investors will gradually begin to re-direct their attention towards active managers who can deliver low-beta correlated returns. The danger in allocating to passive strategies at present is that we find ourselves at the tail end of an economic cycle and the distribution of returns is not as robust or diverse; in fact, return profiles are more skewed to the downside. Cash and alternative strategies are better options and eventually, these asset categories will re-take center stage, as they did in 2008 and 2002.

What is your outlook for the economy?

The U.S. economy is clearly entering the late stages of its cycle during which inflation accelerates, employment growth slows, and private sector confidence peaks. The Federal Reserve is also likely to act faster than expected which could stymie earnings growth and, more broadly, economic growth. Unless productivity picks up quickly, things will not get any better than they are now…this is as good as it gets.

What keeps you up at night?

The global political landscape appears to be at a critical juncture. Countries are now deciding whether to continue in the direction of the post-World War II ideology of openness and inclusion or to retreat behind national borders. My fear is that as this discourse transitions into more isolationist policies by these advanced economies, the spirit of international collaboration weakens and this fracturing poses more potential dangers than any of us can imagine at present.