Trends Watch: April 13, 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 David Simon, CEO, Twin Capital Management.

What is your outlook for the alternative investment industry?

I believe the industry will ultimately continue growing, though we will continue to see pressure on fees.  Funds that produce real alpha will be rewarded, but even here, I think the marketplace is looking for an improved balance, or a greater partnership, between LPs and GPs.  Markets do not just go straight up. A prudent investor will realize that there will be dislocations in the markets and should allocate at least a portion of their assets with an experienced hedge fund manager with a history of positive results in all types of markets.

What is your outlook for the economy?

The United States has enjoyed easy money with historically low interest rates for a very long period of time.  I believe that while the markets anticipate large tax cuts, which are largely priced into the markets, no one seems to be taking into account the damage that higher interest rates and a strong U.S. dollar will have on earnings.  As interest rates rise, there is an inflection point where investors become more conservative and embrace safe, high-quality bonds so they can sleep safely at night, especially if stock markets become more volatile.

What keeps you up at night?

With the slow pace of hires in Washington and the inability of the Republicans to agree on anything I am worried that they will miss their chance to lower tax rates and soften regulation before they risk losing their control of Congress in the midterm elections.