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alternatives will continue to grow as a percentage of total portfolio allocation from both institutional and high net worth investors.

Trends Watch: August 31st, 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 Alim Kassam, Co-CEO, Rama Capital Partners.

What is your outlook for alternatives or more specifically, direct lending?

I think alternatives will continue to grow as a percentage of total portfolio allocation from both institutional and high net worth investors.  Public markets appear fairly valued, at best, and investors are more willing to accommodate slightly less liquid strategies for lower risk and better total return.  Within alternatives, direct lending continues to be a growing segment and I believe the risk/reward profile for asset backed, uncorrelated lending strategies is very compelling from both absolute and relative value perspectives.

What is your outlook for the economy?

Corporate earnings, the unemployment rate and low borrowing costs by historical standards all seem to support a stable, low growth outlook.  Looking into the bottom up data that we swim through every day, DOM (days on market) times for real estate are still low, which is a healthy indicator of strength in the housing sector.  Piecing it all together, we are cautiously optimistic about steady economic expansion.

What keeps you up at night?

Escalating geopolitical tensions need to be monitored.  If the United States is drawn into another military conflict, this could create some turmoil in terms of shifting the rate of return expectations across asset classes.  As a leading mortgage lender to non‐prime borrowers, we also worry about potential over‐regulation and the constrictive effects of less credit availability to working class citizens.

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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