'Passion Assets' Pique Financial Interest, Family Offices Protect from Downside Risks and the EV Era Dawns in this Week's Edition...
Take a Lap Around the Industry
IBM Bets Big on AI, Sets Up $500M Venture Fund (Axios)
Homebuyer Activity Ticks Upward as Mortgage Costs Plunge (CNBC)
Investor Caution Rises Ahead of Expected Fed Rate Hike (Bloomberg)
NYSE Ex-President Explores Possibility of Bringing FTX Back (WSJ)
Luxury Turns Lucrative: The Rise of Passion Assets in Investment Portfolios
In a recent study by Fladgate LLP, investors and financial advisors have revealed a keen eye toward 'passion assets', a niche but rapidly growing sector encompassing luxury items such as fine art, vintage wines, and classic automobiles. This shift, catalyzed by the allure of both personal enjoyment and financial gain, suggests a marked change in investment strategies. With over 300 industry participants weighing in, the report reveals a notable trend towards these tangible asset classes, viewed as a hedge against inflation and a diversification from traditional stock and bond portfolios. The research underscores the critical role of specialized advisory services in navigating this complex market, as the enthusiasm for passion assets grows in an unpredictable economic landscape. This development points to a broader movement within wealth management that champions alternative investments, reinforcing their validity in the modern financial portfolio.
"Luxury assets are traditionally known for their emotional and tangible appeal. The added, and to some, unconventional value lies in understanding both their investment potential and seeing them as a store of value which can be leveraged."
Fladgate LLP
Private Funding Pulse Check
Tabby, an interest and fee-free buy now pay later (BNPL) shopping platform, has secured $200M in a Series D funding round joined by Hong Kong-based Blue Pool Capital
In a recent Venture follow-on round, Cercano Management participated in an $1M investment in AdaptX, a self-serve AI-driven clinical management company
Artha India Ventures have participated in a $100K Pre-Seed follow-on funding round for Himshakti, a Himalayan salt and spice food retailer
Narotam Sekhsaria Family Office have engaged in a $8M Series A investment in Sequretek, a Woodbridge, NJ-based global cybersecurity company
Family Offices Urged to Take Holistic View of Risk in New Collaboration Findings
A new collaboration between Ernst & Young and the Wharton Global Family Alliance aims to provide insight into issues facing multigenerational family businesses and their offices. Their Family Office Benchmarking Report reveals how family offices are taking a defensive stance focused heavily on mitigating financial risks in the face of market volatility, while often neglecting operational and strategic risks. For example, many family offices have shifted assets into cash or highly liquid short-term fixed income, reexamined risk tolerance, and identified financial and investment risks as top concerns. However, the report suggests more proactive risk management is needed through improving visibility into portfolio liquidity, rebalancing based on preset allocation targets rather than just calendar dates, implementing succession planning and documented processes for staff, and strengthening cybersecurity protocols. Overall, the report indicates family offices may benefit from taking a more holistic and preventive approach to risk management, enabled by changes to people, processes and technologies. This can empower family offices to respond nimbly to evolving market opportunities and threats.
"As the landscape of risk continues to take on new dimensions, it’s imperative for offices to take a more active and operational view — through the lens of people, process and technology improvements...Active risk management doesn’t just react to an oncoming storm — it mitigates the fallout from disturbances that aren’t even in the forecast yet, while equipping you with the tools and the insights to capitalize on evolving opportunities."
Bobby Stover, EY
Economic Fault Lines Emerge as World Shifts to EVs
The global transition from gasoline-powered vehicles to electric vehicles (EVs) is triggering economic and political shifts around the world. Major auto manufacturing countries like China, the US, and the EU are jostling for position in the EV industry, directing billions in investments and subsidies to secure domestic jobs and global market share. For smaller countries, the stakes are high. Some stand to benefit enormously from EV investments, like Hungary where the city of Debrecen has attracted over $13 billion in foreign investments, mainly from China, to become a major EV battery production hub. But the transition also threatens economic disruption, as traditional auto manufacturing powerhouses like Thailand and Mexico scramble to catch up to China in EVs or risk losing millions of jobs. With BloombergNEF forecasting the EV market to be worth nearly $90 trillion by 2050, the geopolitical and societal impacts across the globe are only just beginning as economies reorient around the electric future.
"The automotive sector is a major source of manufacturing jobs, R&D investment, and innovation, but not everyone is going to make this transition smoothly...It’s all up for grabs, and nobody wants to be left behind."
Colin McKerracher, BNEF
Diversifying Portfolios with Alternative Investments Amidst Market Uncertainty
Amidst the prevailing uncertainty clouding financial markets, alternative investments have emerged as a point of focus for those looking to either hedge risks or bolster the alpha in their portfolios. Noah Hamman, CEO of AdvisorShares, underscores the importance of incorporating such alternatives before they become a necessity, likening them to a form of portfolio insurance. The diverse universe of alternative investments ranges from private credit to real estate investment trusts (REITs), and while they offer the allure of non-correlation with traditional markets—a trait highly sought after by experts—they also bear the risk of significant volatility. The performance of alternative strategy ETFs this year is a testament to this divergence, with the best performers boasting gains upwards of 76.7% and the worst trailing at losses between 58.8% and 88.7%. Advisors including Christian Salomone and Chuck Failla advocate for a strategic inclusion of alternatives in portfolios, particularly as a hedge against geopolitical-driven market volatility. However, there also exist voices of caution like Paul Schatz of Heritage Capital who question the timing and broad categorization of alternative strategies, especially in the face of a potential recession.
"Equity valuations are stretched, real yields are under pressure, and a lot of investors are doing the math and saying it doesn’t add up to what they need...You can take more risk in beta, which might not be ideal, or find ways to add alpha to the portfolio."
Edelman Financial Engines acquired Align Wealth Management, an Oklahoma City-based RIA and private wealth group with $425M in AUM
Align is led by Dennis Packard and Brian Puckett and has offices in Oklahoma City and St. Petersburg, FL
Align provides investment management, tax planning, retirement planning, and other services to nearly 360 clients
Dennis Packard joined Align in 2006 after working at TD Waterhouse Investor Services
Written by:
Andrew Popp | Sr. Research Associate
FINTRX delivers an industry-leading suite of private wealth data and research solutions to the alternative investment space and private capital markets. Engineered to help clients identify and access family office and RIA capital intuitively, the FINTRX platform ensures accurate and updated data and research on 850,000+ private wealth records globally. To subscribe to our newsletter and see previous versions click below.
