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Despite Grim Economic Outlook, Investors Are Not Spooked

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Wealthy investors are planning on making “considerable additions” to their investment portfolios this year – despite red-hot inflation and historic interest rate rises to combat it, stagnant growth, tax hikes, Putin’s war in Ukraine and growing Covid-19 cases.

This is the assessment from Nigel Green, the CEO and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations, as the U.S. Federal Reserve moves to raise its key policy interest rate by half a percentage point, the biggest jump in 22 years. It has also vowed to shed assets from next month.

He comments: “Just when we all believed we were through the worst of the pandemic’s main economic challenges, the investment landscape shifted again.

“We’ve got inflation that’s running at its highest level in decades and the world’s most influential central banks are raising interest rates, and will continue to do so in the near-term, in efforts to cool it.

“There are the global supply chain issues; the Russia-Ukraine war; and China’s Covid crisis, and the so-far-failed attempts to halt it, adding to global inflationary pressures by further disrupting supply chains in the ‘factory of the world’.

“Plus, the slowing of the world’s second-largest economy, which has been one of the fastest-growing for the last few decades, could have a dire ripple effect across the globe. There could be potentially considerable consequences for overseas trade, financial markets, and global economic growth.”

However, even in this stormy backdrop, high-net-worth investors are moving to top up their investment portfolios.

“Despite the headwinds, our clients around the world are telling us that they are seeking to make considerable additions to their portfolios between now and the end of the year,” confirms the deVere CEO.

“As in-the-know investors, they understand that regardless of the headlines, much of the current news has already been priced-in by the markets.

“And they know that if there should be more ‘unsettling’ news to come, which seems likely, it will create significant buying opportunities to build their long-term wealth by topping up their portfolios at lower entry points.”

As the reports of a global recession ramp up, there remains one clear way for investors to maximize returns relative to risk: the time-honoured practice of portfolio diversification.

“A considered mix of asset classes, sectors, regions and currencies offers protection from market shocks. A good fund manager will help investors capitalize on the opportunities that volatility brings and sidestep potential risks as and when they are presented,” explains Nigel Green.

He concludes: “Savvy investors are staying invested and, in fact, increasing investments and not paying attention to or being spooked by short-term fluctuations and headlines. Working alongside an adviser, this is a solid strategy.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Investment

Yield-starved Investors Should be Exploring Less Traditional Opportunities

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Now is the time for investors to consider diversifying into less traditional asset classes, affirms the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organisations.

The assessment from deVere Group’s Nigel Green comes as global stocks continue to experience turbulence.

He says: “The three major equity indexes on Wall Street are experiencing their worst stretch of losses in decades, and this is being echoed globally.

“It comes amid investors’ concerns over inflation, which is forcing central banks to slam the breaks on their economies, the ongoing war in Ukraine, Covid lockdowns in China’s manufacturing heartlands known as the ‘factory of the world’, and some household name companies posting weak results.

“This backdrop is creating a yield-starved environment for investors.”

He continues: “As such, for those looking for both capital appreciation and capital preservation, now is the time to consider diversifying into less traditional, return-enhancing asset classes.

“These could include venture capital, structured products, cryptocurrencies, high dividend stock, hedge funds, managed futures, and direct real estate, amongst others.”

“Such investments could also be useful tools to improve the risk-return characteristics of your investment portfolio. This is because they increase diversification and reduce volatility, due to their low correlations to more traditional investments such as stocks and bonds; and they can hedge some portfolio exposures.”

However, says the deVere CEO, considering that these investments are often more complex than their traditional counterparts, working alongside a good fund manager will likely be critical to ensuring return-boosting results.

He goes on to say that whilst less conventional asset classes should also be considered, investors should remain invested in the traditional markets too “because financial history teaches us that stock markets go up over time.”

Nigel Green concludes: “Yield-starved investors should explore less traditional opportunities, not only for potentially higher returns, but also as they provide diversification and downside protection for their portfolios.”

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Private Sector to Invest N169.72bn Tax Credit in Four Roads Construction

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The Federal Government of Nigeria, through its Executive Council, on Wednesday, approved N169.7bn private sector investments for at least four road infrastructures under the government’s Tax Credit Scheme.

Minister of Works and Housing, Babatunde Fashola, made this known to the State House correspondents after the council meeting. At the meeting presided over by President Muhammadu Buhari, Fashola disclosed that the scheme was initiated in 2019 through Executive Order 7 signed by the President, and that the arrangement allowed private sector players to finance public infrastructure instead of paying taxes and then offset it over time using tax credits. 

In the statement made available to Investors King, the four roads include a 234 kilometre stretch from Bali to Sheti through Gashaka to Gembu in Taraba State at the sum of N95,232,474,010.72 and the second road, which is also a tax credit scheme, is made up of three roads worth N74,486,577,050.

For the 234-kilometre road in Taraba costing N95.23bn, Fashola noted that N20bn under the NNPC Tax Credit Scheme would be disbursed to begin the project soonest.

“The two main memoranda relate to the uptake by the private sector in response to the tax credit programme, which we initiated in 2019, by Mr. President signing of Executive Order 7 to allow private sector finance public infrastructure in lieu of tax and then to offset it over time using tax credits.

“So the first road that was awarded today on that policy initiative is the rule road from Bali to Sheti through Gashaka to Gembu in Taraba State. A total of 234 kilometres reconstruction of that road in the sum of N95,232,474,010.62.

“The existing road, for those who are familiar with it, has no concrete stone base. It is just laterite on the asphalt so it doesn’t last and it’s breaking up and leading to potholes.

“So we’ve rewarded this now for reconstruction under the tax credit scheme, there’s a N20bn provision under the NNPC tax credit scheme that will be used to kickstart this immediately,” he said. 

Fashola added that “the second road which is also the tax credit scheme, which was approved by the Council is actually three roads. The applicant, in this case, is Mainstream Energy Solutions, a major energy player in the country and is now seeking to also participate in this policy by investing a total of N74,486,577, 050.”

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72% of North American Quant Fund Managers Struggle to Access High Quality Data

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New research with fund managers in North America who collectively manage around $600 billion, reveals they are placing a growing emphasis on both the quality of the data used in their investment processes and on having access to the technological capabilities to efficiently process data (please see the attached press release). Six out of ten (60%) believe this is crucial to achieving above-average returns in the future.

The study, which was commissioned by quant technologies provider SigTech, found that 94% of fund managers find the process of evaluating data, ensuring it meets quality standards and negotiating with data vendors challenging. 72% say it is difficult to source data that is cleaned, validated and ready to use from vendors.

When it comes to onboarding new data sets, nearly six out of ten North American fund managers say they encounter problems, with 56% saying it takes between 1 and 6 months to have new data fully operational internally.

As a result of the many challenges North American fund managers encounter when sourcing and managing data, 64% expect to increase their budget in this area over the next few years.

When asked to pick the two asset classes where they encounter the greatest difficulty in accessing high quality data, 62% of North American fund managers cited fixed income, followed by 54% who selected commodities. In terms of the two financial instruments where they have the greatest difficulty in securing high quality data, 66% cited forwards, followed by cash/spot (58%) and then futures (40%)

In terms of outsourcing of data services, the study found that 64% of fund managers have increased their level of outsourcing over the last two years. Going forward, 77% plan to outsource more between now and 2024, with none seeing a decrease. When asked which factors are fuelling the growing trend towards data services outsourcing, a shortage of qualified in-house subject matter experts and resources was cited as the biggest driver.

Half of those surveyed (50%) found negotiating with data vendors the most frustrating part of the data onboarding process, and 60% say that evaluating the different vendors is challenging.

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