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Shaky Global Economy Alters Investment Focus For Family Offices – Forbes

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The year 2019, a year filled with hot headlines such as heatwaves in a desert. The economic downturn and fear of recession were the top concerns amongst smart money and family offices. These concerns were on the back of the tumultuous trade war between the U.S. and China. This trade war kept the global central banks on their toes and they took a weapon of mass protection out, once again—the dovish monetary policy. 

This monetary policy drove bond yields to the ground, the Treasury yields in the U.S. touched levels that haven’t been witnessed in decades. The feeble global growth and lower bond yields have shifted the investment focus among family offices and High Net Worth (HNW) individuals. They struggled to find bonds with positive yields and the scarcity of these assets altered their investment strategy. They have started to favour “impact investing”.  

At its core, impact investing combines financial returns with social impact or a friendly environmental outcome. Since 2018, this term has been more of a buzz word. However, this niche investment attracted the attention of the new European Central Bank’s head, Christine Laggarde. The ECB’s new asset purchase program is going to include green funds—funds focused on investments that have a friendly environment outcome. 

Smart money and family offices have paid close attention to this trend and they believe it is likely that central banks may expand their umbrella of investment from green funds to other funds with a different social impact. They believe that impact investing will attract more capital flow into 2020. 

Sir Anthony Ritossa from the Ritossa Family Office who held the 10th family office event in Dubai said “family offices are deeply committed to supporting philanthropic causes where they can improve society. Impact and social responsibility are definitely at the top of our minds as we enter a new year with new opportunities to make a difference. Family offices have generated tremendous multi-generational wealth through the years by cherry-picking the best off-market co-investment deals.”  

Ahmad AR. BinDawood, CEO of Danube & BinDawood, BinDawood Family office said “for us, it is imperative that any investment we make has a social angle. Our current investment is having a positive impact on 10,000 households (employees) in Saudi Arabia and we are making sure that our employees have full educational support because we promote employees to top roles within our organisation.”

Other areas of considerable thought among family offices are megatrends. Saudi Arabia sits on top of this ladder. Since Crown Prince Mohammed bin Salman announced Vision 2030 in 2016, various economic and social reforms are geared to diversify the economy away from its traditional dependence on oil.  

The reason that family offices are interested in Saudi Arabia is that Vision 2030 aspires to grow household spending on entertainment to 6% by creating a SAR 30 billion market. Saudi Arabia has already eased off the process of tourist visas and this is the direct result of Vision 2030 which aims to develop more Saudi historical and heritage sites. The plan is to double the number of sites that are currently registered with UNESCO. This means a massive new infrastructure development to support tourism.

Ahmad’s family group, the BinDawood family office, is making an investment to support the tourism industry through its investment in hospitality in the Kingdom and as well as BinDawood Holding’s networks of supermarkets across the kingdom.

Mr. Ritossa said “global attention is on Saudi Arabia as a true powerhouse with tremendous future business potential. Aramco’s IPO’s massive valuation is indeed a big win for Saudi Arabia and further solidifies the region’s position as a strong and transformational economy. Also, we envision more major deals and IPOs in the coming year as the region continues to expand.” 

To conclude, the exuberant volatility and feeble global economic growth have altered the habits of family offices. Impact investment and megatrends are their focus. In my opinion, this investment strategy is going to become more famous in 2020. They see the European Central Bank’s involvement in the impact investment area as a positive sign. Finally, they are also ready to bet on the Saudi tourist and entertainment industry given the potential of Vision 2030 and the outcome of Aramco’s IPO. 

  

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China proposes rules to regulate private pension investment via mutual funds – Reuters.com

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A Chinese national flag flutters near the building of China Securities Regulatory Commission (CSRC) at the Financial Street area in Beijing, China July 16, 2020. REUTERS/Tingshu Wang/Files

SHANGHAI, June 25 (Reuters) – China’s securities regulator proposed rules to regulate private pension investment via mutual funds, setting the criteria for qualified products and sales agents under a scheme that will channel fresh savings into the country’s capital markets.

The draft rules, published by the China Securities Regulatory Commission (CSRC) late on Friday, came after Beijing in April launched a milestone private pension scheme to tackle challenges of aging population. read more

Under the scheme, eligible Chinese citizens can buy mutual funds, savings deposits and insurance products via their own individual pension accounts, potentially boosting a pension market that has lured foreign asset managers including Fidelity International and BlackRock.

The proposed rules “have set a relatively high bar for products and institutions, and are designed to ensure safety of pension fund investment and protect investors’ interest,” the CSRC said in a statement on its website.

Initially, pension target funds with at least 50 million yuan ($7.48 million) of assets over the past four quarters are eligible under the pilot pension scheme, the CSRC said.

Other types of retail funds with clear investment strategies and good long-term track records will be gradually added to the eligibility list as the scheme expands, the CSRC said.

Currently, there are 91 pension target funds that meet the CSRC’s criteria, according to TF Securities.

In addition, fund managers and sales agents participating in private pension business must set up internal control systems, adopt long-term incentives, and ensure independent operation of the pension assets, according to the rules.

Independent consultancies estimate China’s private pension market will grow to at least $1.7 trillion by 2025, from $300 billion currently.

In 20 years, 28% of China’s population will be more than 60 years old, up from 10% today, making it one of the most rapidly-aging populations in the world, according to the World Health Organization.

($1 = 6.6878 Chinese yuan renminbi)

Reporting by Samuel Shen and Brenda Goh
Editing by Nick Zieminski

Our Standards: The Thomson Reuters Trust Principles.

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Not gold or bank FD, Jefferies finds this asset as top investment by Indians | Mint – Mint

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Amid soaring inflation and slowdown worries, investors are busy finding out save haven for their money. While some are batting in favour of gold, some investors are favouring debt instruments for short term like bank fixed deposits (FDs) and other deposits. But, if we go by the Jefferies findings, around half of the Indian household savings in March 2022 has been invested in real estate properties whereas bank deposits and gold are distant second and third most preferred asset investment options among Indian households.

As per the Jefferies findings, out of $ 10.7 trillion Indian households assets in March 2022, whopping 49.4 per cent have been invested in real estate properties whereas 15.10 per cent went to band deposits 15 per cent of the Indian households savings were invested in gold. Impact of Covid-19 pandemic was also visible in this Jefferies report as Indian households invested 6.20 per cent of their net savings in insurance funds and it was fourth most preferred investment option by Indians.

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Photo: Courtesy Jefferies

Provident funds and pension is at 5th spot after receiving 5.70 per cent of $10.70 trillion Indian households savings in March 2022. Despite heavy FIIs selling at Indian equity markets, DIIs have remained net buyers since October 2021. However, in Jefferies report, equities has received 4.80 per cent of the net Indian households savings in March 2022 and it is 6th most preferred investment option among Indians. As Indian households has a habit of keeping some part of its savings in liquid form. 

Jefferies report has a mention about it as well. As per the Jefferies findings, 3.50 per cent of the net Indian households savings in this period has gone to cash or liquid segment and it an obvious least preferred option among the Indian households.

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HomeFirst Home Healthcare secures investment from Fulcrum – PE Hub

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Harpeth Ventures also participated in the investment.




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