Considerations for Alternative Investments During COVID-19: The Road Back

COVID-19 has been a game changer in 2020. All facets of daily life and business have been deeply impacted and disrupted as a result of the current global health pandemic. In the early stages, there was a great deal of fear, anxiety, and economic pain. More recently, the curve is flattening in many cities around the nation and public and private sectors are eager for a return to normalcy. However, a return to the regular in the aftermath of a major public health crisis presents a number of uncertainties, and unforeseen market opportunities. This was the focus of “The Road Back,” a virtual panel discussion centered around the financial services industry working remotely, hosted by Eugene Tetlow of EisnerAmper’s San Francisco office, with insight from the following panelists:

• Zack Ellison, Founder and Managing General Partner, A.R.I. Venture Capital
• Vincent Calcagno, CEO, Agile Fund Solutions
• Radha Mistry, Foresight Practice Leader, Autodesk

Here are a few talking points:

• COVID-19 did not interrupt workflow for financial services professionals, giving them a competitive advantage over their peers since robust IT networks, security systems, and Bloomberg Terminals have been put in place since the September 11 attacks, allowing them to easily adapt to working remotely.   After the September 11 attacks and realizing the majority of critical information and infrastructure was concentrated in New York City, a major push was made to alleviate that risk by developing the proper systems for asset management professionals to work remotely.
• The financial services industry has also been uninterrupted in comparison to other industries because it has been able to embrace robotic automation, reduce manual labor and increase shareholder profits. Therefore, such firms in the current environment have the potential to thrive in the months and years ahead.
• With regards to targeting investors, during this crisis, the financial services industry has witnessed the death of the tech unicorn, defined by flash and high visibility, high risk/reward, and significant cash burn rates. Instead, allocators have been looking for camels defined by their economic durability, low maintenance, and lack of aesthetic beauty.
• Risk management is once again paramount, just like it was during the 2008 global financial crisis. Investors with a background in risk management and due diligence who had experience faring well in other volatile markets are best poised for this crisis.  Therefore, money managers should place more of an emphasis on managing risk not only in their investment portfolios but business overall.
• Finally, a couple of takeaways: Now is the time for managers to be innovative with their businesses while at the same time being fiscally responsible in the best interest of their stakeholders. In addition, the post COVID-19 world will be very different from the world of 2019 so managers need to focus both on the macro and micro level when making investment decisions.