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The alternative investment (hedge fund) area looks like 15-20 years ago. Interest rates will go higher and volatility in real estate is worrying.

Trends Watch: May 18, 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 Whitney Quillen, CEO, Stage Point Capital.

What is your outlook for alternative investments and more specifically lending?

The alternative lending space today reminds me in many ways of what the broader alternative investment (hedge fund) area was 15-20 years ago. We are in the early innings of a dynamic, recently prominent investment class that has tons of runway left and that will produce many winners and losers.  With both stock and bond markets at or near all-time highs, low-fee passive investment strategies increasingly encroaching on the active manager space, and the steady, inexorable march of technology beginning to dislocate the entire financial services industry, we continue to see strong investor appetite for the non-correlated alpha that bespoke lending investment strategies can offer.

What is your outlook for the economy?

Our view is that we are sort of in the “land of the unknown,” economy-wise.  The massive, unprecedented infusion of liquidity into the banking system by the Fed has clearly fueled the incredible asset inflation of the broader markets (as well almost all other asset classes) witnessed over the last 20 years or so, but how this all ends no one really knows. We are fairly certain that interest rates will go higher, though. Unless, of course, there is some sort of international trade war or other destabilizing force that creates deflation. Who knows.  What does seem likely is much greater volatility than the economy has experienced in the last 10 years.

What keeps you up at night?

I'm worried about greater volatility in asset class prices, including real estate, which I can't control, so I spend my energy on those factors which our team can control: our lending standards, loan duration, loan-to-value on our portfolio and what types of partners we choose to do business with.

Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.

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