Displaying items by tag: infrastructure

The world is slowly transitioning to renewable energy. For institutional investors, this transition is likely to bring many investment opportunities. Of course, this will be a slow process that will take place over decades.  

The first step is the displacement of coal by natural gas, which is cleaner in terms of emissions and has already begun in many parts of the world, including the US. Another essential step is investing in various clean energy segments such as batteries, transmission and distribution, utilities, and renewable generation equipment. 

Many countries are recognizing energy security as a national security concern, which is also leading to supportive policies and capital flows. Countries are investing in electrification and local manufacturing in key areas like semiconductors, energy production, and storage. 

As the world moves toward net-zero emissions by 2050, companies in many parts of the economy will have to invest in decarbonization efforts. Morningstar sees opportunities for investors who understand the transition’s impact on the economy and various industries.

Capital expenditure for clean energy is expected to reach between $4 trillion and $5 trillion per year by the end of the decade. However, due to the transition taking place over a multi-decade period, investors should also have sufficient patience, anticipate volatility, and manage risk throughout the cycle. 

Finsum: We are in the early stages of a transition from fossil fuels to renewable energy. There will be plenty of opportunities for investors to earn healthy returns, given the size and scale of the trend.

KKR recently shared its growth strategy for alternative investments geared towards wealthy individual investors. Initially, it plans to offer products focused on private credit, private equity, infrastructure, and real estate and aims to distribute them through financial advisors. The firm has noted strong interest from wealth managers and registered investment advisors. It believes that its 48 years of experience in the space and strong legacy will differentiate KKR from its competitors.

According to Eric Mogelof, KKR’s head of Global Client Solutions, “Private wealth is a transformational opportunity for KKR. Private wealth is large, it’s growing quickly, and importantly, allocations to alternatives in this space are only going in one direction, and that is up.” KKR sees alternatives accounting for 6% of the private wealth market by 2027, a sharp increase from its 2% share in 2022. 

This series of products will offer qualified investors the same type of access as institutional clients without any additional fees. KKR also believes that these products will be more liquid than competing alternatives. The firm also sees momentum to offer even more alternative product types in the near future. This is in response to their conversations with advisors, banks, wirehouses, and brokers, who have found that allocations to alternatives are increasing. 

Finsum: KKR sees a big opportunity in alternative investments and is launching a suite of products. It hopes to target wealthy investors through financial advisors. 

ProShares DJ Brookfield Global Infrastructure ETF (TOLZ) is the only ETF that focuses exclusively on pure-play companies—the owners and operators of infrastructure assets...See More

President Biden spoke at the Port in Baltimore to celebrate the passage of the $550 billion dollar spending bill which will allocate $17.1b to ports like the one he spoke at. In order to expedite the spending spree, the White House said that $240 million of the bill will be allocated to grants that they plan to move on in the next 45 days. The Biden administration sees port infrastructure spending as part of a key process to alleviate the supply constraints in the U.S. economy that are a key contributor to record inflation in many policy makers' eyes. The Bill is already facing criticism from former President Donald Trump who says only a fraction of the bill's allotment will be spent on infrastructure. However, it was 11 republicans who stepped across the aisle that was key to passing Biden’s first signature piece of infrastructure legislation.

FINSUM: It would be a big win for the U.S. economy if the infrastructure bill could make substantial gains toward reducing inflation which has markets flummoxed and consumers concerned.

(Washington)

This whole year it is has been assumed—almost as an unquestioned default—that taxes would rise under the Biden administration. For example, munis have surged in value on this expectation. However, that assumption seems to have gotten well ahead of itself as new developments suggest tax changes may be a way off yet. The big change is that the infrastructure package is coming up for a vote—potentially this week—and the deal which has materialized between the parties has no tax rises whatsoever in it. That means Biden’s plan to hitch tax rises to increased infrastructure expenditure have fallen through, at least for the time being.

FINSUM: So if this plan gets approved without any tax changes—which looks quite likely—it seems clear that clients will escape 2021 without any major changes to federal taxes (including long-term capital gains taxes). Therefore, any planning should take account of the fact that 2021 may be much more advantageous than 2022.