NEWSLETTER of September 8, 2023

The following content has been added at finexpert:

Allen & Overy
PRIVATE MARKETS 2023 – LET’S CHECK THE PULSE!
Private capital reached a record of almost USD1.2 trillion in 2021. Since the second half of 2022 we’ve seen a slowdown in global fundraising, reflecting a challenging macro-economic environment, with uncertainty and disruption driven by inflation, rising interest rates, higher debt financing costs, volatility of public markets, supply chain disruptions and labour challenges – not to mention geopolitical turmoil. >more

Invesco
INVESTMENTAUSBLICK 2. HALBJAHR 2023
To curb the highest inflation in several decades, the central banks of the Western industrialized countries have aggressively tightened their monetary policies. This has dampened price pressures, but also put a notable brake on global growth and led to some financial accidents such as the collapse of several regional banks in the USA. Even in this environment, however, domestic demand remains robust in many markets. This is particularly true of demand for services. >more

Lazard
FIXED INCOME VIEWPOINTS: HOW HIGH WILL BOND YIELDS GO?
Bond markets delivered a jolt to investors in the waning days of summer: Long-term bond yields soared to their highest levels since the global financial crisis in 2008. The 10-year Treasury yield hit 4.33% on 17 August, having crept up 45 basis points (bps) since mid-July — and leaving startled investors to wonder, how high will it go? The answer may be important to investors around the world. The 10-year yield is a reference rate for loans in the United States, notably mortgages, and it is used as the “risk-free” rate in many financial valuations. A significant rise in the 10-year yield now could put the brakes on what has so far been a resilient US economy, potentially affecting global growth. >more

Goldman Sachs
HOW QUANTIFYING AVOIDED EMISSIONS CAN BROADEN THE DECARBONIZATION INVESTMENT UNIVERSE
ESG ownership continues to be largely concentrated in a subset of more-obvious pure play solution providers, mainly solar, wind and water. However, GS Research analysis suggests that since 2010, energy efficiency has helped to reduce 50% more carbon emissions than renewables generation additions. In this report, GS Research discusses how incorporating avoided emissions into investment decisions could help identify underappreciated enablers in the ecosystem of green solutions. >more

THE RISE OF STAR FIRMS: INTANGIBLE CAPITAL AND COMPETITION
Meghana Ayyagari, Asli Demirgüç-Kunt, and Vojislav Maksimovic
2023
The large divergence in the returns of top-performing (star) firms and the rest of the economy is substantially reduced when we account for mismeasurement of intangible capital. Star firms produce and invest more per dollar of invested capital, are not protected from trade shocks, and have more valuable innovations as measured by the market value of patents compared to non-stars. While star firms have higher markups, these are predicted early in their life-cycle at a time when they are small. Overall, correcting for the mismeasurement, the evidence supports the role of efficiency in determining the rise of star firms. >more

DIVERSE HEDGE FUNDS
Yan Lu, Narayan Y. Naik, and Melvyn Teo
2023
Hedge fund teams with heterogeneous educational backgrounds, academic specializations, work experiences, genders, and races, outperform homogeneous teams after adjusting for risk and fund characteristics. An event study of manager team transitions, instrumental variable regressions, and an analysis of managers that simultaneously operate solo- and team-managed funds address endogeneity concerns. Diverse teams deliver superior returns by arbitraging more stock anomalies, avoiding behavioral biases, and minimizing downside risks. Moreover, diversity allows hedge funds to circumvent capacity constraints and generate persistent performance. Our results suggest that diversity adds value in asset management. >more