The Big Reset

One had hoped for 2020 to be a year with a clear (20/20) vision for a promising future. Alas, it turned out to be anything but. We saw homelessness rise in tandem with uber-rich homes and snaking long lines for food even when gallons of milk were poured down the drain and food delivery company, DoorDash debut at stratospheric heights. We also saw many other “odd firsts”- oil tanking to below zero, the Fed buying corporate debt, a services-led recession, Silicon Valley (Tesla, Oracle, HP) fleeing to Texas, Sunni brothers- UAE and Saudi Arabia drifting apart, or for that matter Germans drinking less beer and more wine!

With all mankind’s very existence threatened, and the world turned upside down, upending all of history’s traditions, conventions, practices, observations, patterns, etc., thwarting all semblance of normalcy, the proverbial “new normal” (post GFC) or a “next normal” (at the onset of the pandemic) gives way to “the big reset”! (We refrain from according it a “great” title for there’s nothing great about a depression, recession or a pandemic, in our opinion.)

A humanitarian crisis of epic proportions has compelled us to reimagine our lives in terms of how we behave, function, work, consume and interact. This watershed phase in our lives will redefine business models, pricing structures, supply chains, use of technology and data management and yes-our attitudes toward society and the world at large. Therefore, financial asset prices would no longer be restricted to just plain underlying economics, but investors would also need to be acutely aware of geopolitics, public policy, and societal concerns. As a result, it behooves investors to view world economies, and associated capital markets through a new set of investment lens in this regime change rather than simply bet on a recovery.

Based on our observations in conjunction with some forward-thinking, on-the-ground global investors we continually interact with, we highlight below some tectonic shifts that we think, will reset, reshape and redefine the investment landscape going forward.

Life After Fed: There is no denying that the sole driving force for ebullient global markets this past decade has been central banks led by the Fed. A tacit commitment by the Fed to keeping interest rates low till average inflation target (AIT) hits 2% over time, has discounted the present value of future earnings to higher levels where stocks do not look pricey anymore even though all usual metrics of valuation (P/E, CAPE etc.) point to market frothiness, largely driven by a handful of tech stocks. Aided with potential yield curve control (by buying longer dated treasuries), rates seem anchored lower-for-longer, leaving no alternative for smart money (this time dumbfounded) who point to equity’s higher earnings yield (~4%+ for S&P 500 vs 0.9% for 10 year US treasury- Source: Bloomberg) and follow in the path of the Robinhood traders pushing valuations even higher. The advent of vaccines gives a glimmer of hope for recovery which has recently seen flows re-directed from tech havens towards cyclicals, small cap. and value stocks predicated on an impending recovery.

But with rates already at a rock bottom and rejecting the notion of negative rates implemented in Europe and Japan, the Fed realizes its limited fire power and has repeatedly urged fiscal support. Every dose of bad economic news is good news for more fiscal stimulus that will add to the Fed’s punchbowl to keep the party going, enhancing the wealth-effect by enriching stock portfolios, and increasing home valuations. While AIT is at bay for now, when the Fed reels in its $120 billion a month purchase of treasuries and mortgage securities, or fiscal support is lackluster in a divided Congress, the market will surely suffer bouts of volatility (as during the Taper Tantrum in 2013) seeking a new catalyst to resurrect itself. Thus, it would be hard for any stock or bond trader to have any longer-term conviction, when the market is beholden to announcements by the Fed or Big Government.

However, in the interim, in the words of one of our high-conviction macro managers, “the rise in quant driven models with a focus on market making kind of dynamics have used their speed to flatten out short term systematic dislocations in the market. This has forced a lot of discretionary traders to focus on capturing the medium-term and long-term risk premiums in the market rather than active trading. However, this comes at the cost of increased sensitivity to volatility, which in turn, has imposed a positive correlation with assets selling off as volatility increases. The reverse as volatility declines. This is a dynamic that is likely to continue in the coming years”.

Lower-for-Longer: While anchoring rates lower-for-longer brings asset inflation (stocks and homes), it leaves no room for rates to fall any further (and boost bond prices) to offset any decline in equity prices. Without a ballast for the portfolio and offering negligible income, traditional bonds are losing favor with investors seeking other alternatives. Upfront yield, particularly if it is linked to collateral, will likely matter more on the Fixed Income side of the portfolio. Thus private/alternative credit across the spectrum of direct lending, asset-based lending, specialty finance, royalties, etc. are likely to gain further ground that will likely catapult the private credit industry far above the trillion-dollar mark.

In contrast to private markets, the volume of sovereign and corporate public-market debt in emerging markets has exploded in recent years, rising to $3.5 trillion in hard-currency debt in 2020 from about $2 trillion in 2013, according to J.P. Morgan. This figure jumps to well over $10 trillion if local-currency debt is included. All this debt will need refinancing over the next few years just as macroeconomic fundamentals deteriorate and if public-market investors withdraw. This creates a potential opportunity for private capital to provide refinancing.

Inflation Genie: As discussed above, though inflation does not seem on the near horizon, fiscal stimulus powered by unbridled debt issuance by proponents of Modern Monetary Theory could spur targeted spending (e.g. infrastructure etc.) to unleash the inflation genie out of the bottle. Also, heightened geopolitics and intensifying nationalism are only accelerating the trend away from globalization towards more regional specialization i.e. localization that could potentially erode cost (labor and input) advantages. Taken together with trade tariffs born of protectionist tendencies, a drive toward higher minimum wages, and food price pressures in some quarters (e.g. Brazil), cost-push inflation seems within the realm of possibility in the not-too-distant future. But for now, the increase in money supply is not leading to an increase in the money multiplier thus keeping inflation subdued at least in the immediate future just as it has been for the last decade.

Heavens, Save the Dollar: With interest rates anchored low, debt burdens and fiscal deficits ballooning and inflationary forces set in motion (as discussed above), declining real interest rates threaten the dominance of the US dollar as the world’s most coveted currency. If the Chinese are successful internationalizing their yuan (now the eighth-most actively traded currency in the world) through opening of their capital markets, and yuan denominated contracts etc., they could have little hesitation diversifying further their $3 trillion of US reserves. The mitigating factor up until now has been the lack of a suitable alternative to the US dollar. But if a digital yuan and other Central Bank Digital Currencies (quite the topic du jour among most central banks bar the Fed), gains traction it will only expedite the dollar’s decline. While it spells good times for oversupplied commodities and emerging markets, it translates into more expensive US imports adding to the inflationary pressures as discussed above.

Xi Power: While the US basks in its former glory, China’s rise onto the world stage is undisputed. Whether we argue the legitimacy of their claims as a rising leader or marvel at their meteoric rise, it is here to stay, defying the old world order led by the US or the West at large. (We have written copiously on China’s ascent in our previous posts: A Chinese Menu for China, No China for You, Chinese Bonds- State Call over Fed Put.) Having established itself as a formidable force in technology making rapid strides to build a domestic semi-conductor industry, China is on an aggressive path to modernize its financial markets and expand its military might beyond the South China Seas to the African continent through its Belt and Road Initiative. The Middle Kingdom believes in subjecting all domestic forces-big and small- under Xi Jinping -emperor for life, with an aim to run the country as a family-from the top down, maintaining high standards of behavior, putting the collective interest ahead of any individual interest, with each person knowing their place and having filial respect for those in the hierarchy so that the system works in an orderly way. China’s leaders view their roles in looking after their state/family like strict parents. This form of state capitalism will continue to challenge the democratic order of the West and Xi Power could potentially shape global outcomes in years to come just as Trumpism has altered the global order in the last four years. The clash of two ideologies will be the epicenter of conflicts that could manifest itself in continued tech wars, standard -setting competition, tariff threats, control over international bodies, push toward digital yuan to shift the global balance of economic influence, etc.

President Xi, following in the footsteps of former premier Mao Zedong, believes in creating an ‘equal society’ through an authoritarian state, which in effect denies basic liberties which was at the core of the HK protests. His all-pervasive influence will overpower ants (private companies-reason why the Ant IPO was pulled back) and elephants (SOEs) alike and in turn financial markets. Regulating real estate will always be a key policy initiative, since it represents almost a fifth of the Chinese economy and is the largest in the world. Urban Chinese have nearly 78% of their wealth tied up in residential property, versus 35% in the U.S., according to a report by China Guangfa Bank and Southwestern University of Finance and Economics. Real estate is also a strategic sector to local governments who often depend on land sales for (~ 50%+) revenues. Therefore, real estate overall, is an industry of strategic importance and many policy decisions revolve around it. For example, access to financing for property developers is regulated through the commercial banks with the goal for them to manage the risk of excessive growth of trust financing (shadow banking) and leverage feeding into a potential property bubble. And real estate activity in turn affects global commodity prices. Onshore financing conditions also dictate the flow of issuance by Chinese developers in offshore bond markets where they occupy a dominant position. On the flip side, China often backstops property developers from defaulting to protect savers and aspiring homeowners that could otherwise threaten social unrest- the absolute last thing China ever wants to shake the foundations of a command state.

Concurrently China is very eager to deepen its financial markets and attract overseas capital into its equity (the world’s second largest) and bond markets (third largest). Besides attracting financial flows and internationalizing the yuan, it helps reduce reliance of its SOEs on its domestic banks saddled with bad debts and gives its broad swath of savers another avenue outside of real estate. China is therefore trying to introduce measures to allow pricing of credit risk (without implicit guarantee from the government) as observed recently in the defaults of SOEs like Yongcheng Coal, Tsinghua Unigroup, Huachen Automotive Group, etc. (Source: WSJ). However, China will always be torn between backstopping defaults by SOEs and providing easy credit to alleviate pain on one hand and deleveraging to clean its massive backlog of NPLs and taking a measured approach to revive growth (as witnessed recently since it reopened after lockdowns.) on the other. Therefore, market forces might never truly be allowed to assert to reflect real risk in asset prices.

As US listed Chinese companies resisting financial scrutiny by the Public Company Accounting Oversight Board, migrate to be listed on HK exchanges, it is likely to mop up local liquidity and drive up HIBOR (HK Interbank Offered Rate) that affects the cost of everything from mortgages to corporate loans, to margin financing, squeezing further liquidity in Hong Kong’s banking system as seen in the months leading up to Alibaba’s share sale and Xiaomi’s offering.

In summary, Xi Power and state capitalism, trumps market forces to influence financial conditions and assets and understanding which way the wind is blowing will be key to making China-related investment decisions. Also, in China’s rosy garden, prowl “gray rhinos” (described by Chinese central bank’s financial stability chief) threatening the country, including the large pile of local government debt, more bond market defaults and banks’ high level of exposure to the shaky real estate sector. Therefore, investors lured to everything “China”, especially China (A share) equities and bonds, investors should understand these dynamics closely, as also the “China-beta” in their overall portfolios with China’s growing omnipresence.

Asia- The New Center of the Universe: Outside China, India and South East Asia remain the only other bastions of decent economic growth supported by their young populations, innovation and domestic-oriented policies (e.g. Dual Circulation from China and AtmaNirbhar (self-reliance) from India). Dubbed the largest trade-lane in the world, intra-Asia accounts for some 5% of trade volumes and Asia accounts for almost a third of global trade flows (Source: BCG), which suggest Asia’s heft in sustaining its economic growth. Even before the pandemic, rising labor costs in China had started shifting manufacturing by many Japanese, South Korean and Taiwanese companies to other Asian countries like India and Vietnam. As the virus spread, many companies with manufacturing hubs in China faced massive disruptions to supply chains globally, as these companies were unable to operate their production lines and ship out necessary components for downstream activities in other countries. For example, in Wuhan, the epicenter of the outbreak, where Hyundai has a production facility, it had to stop its production lines in Korea, as they were no longer receiving parts that were made in China. Countries are now proactively encouraging local companies to de-risk their supply chains by onshoring or near-shoring (redistributing it across closer regions). This marks the beginning of a seismic shift in global supply chains as companies renew their focus on risk management. This bodes well for countries like India, Philippines, etc. with a large English-speaking skilled labor force that can also provide a vast base of aspiring consumers in the Asian millennials. Despite relocation of supply chains, China will continue to boast of efficient logistics network and robust infrastructure, R&D capabilities, advanced manufacturing systems, abundant workforce supply, and large repository of rare earth minerals to continue high-end manufacturing e.g. Tesla, etc.

Asia has used disruptions caused by the pandemic to accelerate the development of digital innovations critical to the post-pandemic era. These include remote communications, digital healthcare, mobile payments, e-commerce, and next-generation mobility. According to the World Economic Forum, the crisis has inspired a “public-private push” to make India a digital-first country, resetting the basic life experience and aspirations of more than a billion people. As discussed previously in our post, Venturing for Growth into EM, Asia (across China, South East Asia and India) boasts of a rapidly growing venture capital industry that is fueling the growth of tech companies of every stripe. Any way you cut it, the world’s center of gravity is rapidly moving East to Asia, while the US tries to restore its house in order, and Europe continues to grapple with its patchwork of 27 economies with no fiscal union. Thus, all forward-looking portfolios would at some point be compelled to become Asia-centric much the same way traditional portfolios were constructed with US at the core and everything else as diversifiers. This warrants a deep understanding of Asia as a region, and accompanying nuances that all its underlying economies bring in terms of business environment, politics, culture, etc.

Unlike the US and Europe, Asia still has more levers at its disposal to manage its economy in the near term with interest rates not yet at zero and with more room to do QE. With a relatively modest fiscal stimulus by Asian economies in response to the pandemic, there is room for further rate cuts for countries like India and Indonesia that are still far away from the lower bound for rates, face easy dollar swap lines and no longer face the threat of a rising US dollar that warrants counter measures to defend their currencies. Endowed with global savings that plowed into bond funds in the wake of the pandemic, funds that bailed out of EM earlier in the year are also making a beeline for Asia as evidenced in recent FII inflows. But unlike the past where FIIs were the most dominant force into EM equities and sovereign bonds, a legion of domestic retail investors and local institutions bear watching who can provide offsetting benefits to FII outflows as well as an opportunity to monetize retail sentiments.

In the Middle: Of late the Middle East has moved into mainstream politics given the changing political dynamics within the region (a.k.a infighting) and its shifting relationships with the rest of the world, especially US and now even China. At the center of all discussions has been the Jewish state of Israel, a US ally that has longed for recognition from the Arab world surrounding it. The recent Abraham Accords brokered by the US did attract UAE, Bahrain, Sudan and Morocco to come together to the displeasure of another Sunni brother, Saudi Arabia that continues to feel for the rights of the Palestinians. An added motive is to displace growing Chinese influence in the region through its Belt and Road Initiative (and accompanying debt trap diplomacy), to attract Arab capital into start-up nation, Israel, and in the process allow Arab states an opportunity to diversify their dwindling fortunes away from oil. How the relationships unfold over time, bears watching as much as how the US makes good on the Iran nuclear deal that it reneged in the recent past. Also, the withdrawal of US troops from Afghanistan exposes the world to the risk of resurgence of local terrorist groups capable of widespread terror roiling financial markets.

Multi-Speed Recovery: With the arrival of first vaccines from Pfizer and Moderna, and hopes for many more in the pipeline, the world will eventually heal at various speeds. Demographics, pace of production and distribution overcoming logistical challenges (refrigeration etc.) and corruption (bad actors in the supply chain), will influence the speed of recovery of various economies. Equally important is their pre-existing fragilities and their economic and financial management of the crisis. Countries like Chile, Colombia, Indonesia, Peru with a high degree of reliance on exports of natural resources, and tourism, combined with high fiscal deficits, significant reliance on foreign-currency debt and limited forex buffers are in a more vulnerable position. For some like Chile, Malaysia and Saudi Arabia, the stock of net domestic savings helps alleviate the burden. For the less fortunate, these budget deficits will grow even larger in the coming years, adding to already elevated debt burdens and would influence investment flows.

Some countries such as a few among the African continent like Egypt, Ghana, Kenya are likely to have a competitive advantage as they accelerated their decade-long transformation from exporters of natural resources to hubs of wireless, and e-commerce. In contrast, commodity exporters Mexico, South Africa, and Chile are particularly exposed to the global economic activity fallout which in Brazil’s case is exacerbated further by its high sovereign debt burden and budget deficit. In addition, several LATAM countries e.g. Brazil, Argentina, Mexico, Chile, Peru have been dealing with political crises of their own, making it more difficult to manage the pandemic as a government’s management and response to the crisis has a bearing on its domestic political landscape and electoral outcomes. The collapse in tourism will also weigh on growth in economies like Italy, Thailand, etc. that are more heavily reliant on tourism.

The good news is that with a declining US dollar, EM countries are less pressured to tighten monetary policy as in the past to support their local currencies to ensure stability in the face of foreign portfolio outflows. Their more dovish stance as well as an EM version of quantitative easing via its banking system (as implemented by the South African Reserve Bank) should help revive growth and balance local budgets.  The key this time around would be to capitalize on domestic growth powered by local drivers as opposed to pursuing export-oriented or reflation trades. Hence small cap domestic stories with sufficient liquidity and/or slightly longer-dated trades seem more attractive than larger cap cyclicals dominating  many country indexes.

Innovation Supercharged: Technological innovation has been on steroids in the aftermath of the tech boom of 2000 spanning across the globe permeating every facet of life. And of course, the pandemic has fast-forwarded the digital revolution surrounding us. This has necessitated a rethink by every traditional business (including ÊMA’s-please see below) if it can be reinvented to adapt to the virtual world. For those that have their origins in fintech, med tech, health tech, etc., it begs looking past the IPO boom that has blessed the likes of Airbnb, Snowflake, XPeng, etc. It warrants challenging the initial underlying assumptions for revenues and operating models and focusing on underlying unit economics and burn rates and cash positions. And if the pandemic has exposed any shortcomings in business models, it warrants examining if entrepreneurs have fixed structural problems. Besides the competition for the total addressable market in each space, tech ventures will also have to contend with tightening tech regulations around data privacy, online safety (hate speech/violence) and anticompetition. In the near term, tech companies might even have to grapple with erratic laws, (often without precedent) borrowed from the traditional world probably asset-heavy and without network effects of tech driven business models. Also, with the world moving rapidly into cyberspace, cybercrimes (e.g. hacking of government servers, financial institutions, military intelligence, etc.) targeting the vulnerabilities of the cyberworld could become more frequent. Tech companies are also likely to caught in the crosshairs of global tech wars as the technological arms race rages for dominance and standard-setting across 5G, AI, semi-conductors, EVs, cloud, etc.

Strapped for overall economic growth while witnessing moonshots in the IPO boom, investors are poised to seek growth for their portfolios through venture, private equity and of course in their new-found love for SPACs (Special Purpose Acquisition Companies) that are on tear (170 SPACs have raised $60 billion+, a third of all IPO capital raised in 2020 Source: SPAC Insider). Investors might be challenged to choose between investing with more experienced private equity/venture capital sponsors nurturing hidden gems versus investing into unproven SPACs waiting to acquire more mature prospects. Growth opportunities through innovation are also likely to manifest in the real economy, in the form of ecommerce warehouses, digital farms, freezer farms, ghost kitchens, bio-tech labs, Hollywood studios for streaming content providers (e.g. Netflix, Amazon Prime), etc. To go beyond the traditional public equity route into venture/PE/SPACs to pursue growth, investors will need to be more discerning about underlying opportunities, their inherent risks and above all, their sponsors. Unfortunately, private markets are more opaque than public markets, requiring deep dive due diligence much like private/alternative credit, that many investors have adopted to fill the fixed income part of their once-upon-a-time 60/40 portfolio comprising public equities and bonds, respectively.

Walking Dead: Moratoriums, forbearance, debt for equity swaps, debt term-outs etc. were tools adopted globally to keep many businesses alive. While it resuscitated the strong, many weak ones will be around like zombies that would eventually face bankruptcies, credit downgrades, covenant defaults and operational liquidity challenges and will need to be restructured/absorbed/liquidated. In many instances, governments have intervened to keep companies afloat in industries deemed “strategic” as observed with Korean shipbuilders, Thai property developers, Korean construction sector, etc.

Eventually the chickens will come home to roost, and banks will be faced with non-performing loans gumming up their balance sheets.  In anticipation, 21 private distressed debt funds have raised a combined $19 billion worldwide as of Dec. 10 adding further to their mid-year dry powder levels ~$122 billion (Source: Preqin) to invest in NPLs and provide rescue/special situations financing in real estate, infrastructure and other dislocated businesses in energy, aircraft leasing, restaurants, hotels, live entertainment, etc. Unfortunately, it is a mixed bag of distress experts and credit funds who have pivoted in that direction to partake in the opportunity on the horizon. With stress and defaults breaking out globally in due course, investors will need to be discerning in partnering up with managers with proven work-out capabilities and those who have a sound understanding of local bankruptcy laws, well-entrenched sourcing networks and established relationships with local servicers. Also, managers will need to be astute in understanding local politics to avoid investment in sectors that don’t “clear” or haven’t been allowed to clear by governments. As more investors target allocations to the distress space, it might be tempting to follow the earlier herds in re-upping with mega distress funds continuing to gather assets. It for sure poses a challenge for profitable deployment making a case for smaller but differentiated local distress managers.

P/E AND ESG: Covid-19 and social unrest over the past nine months has exposed serious fault lines in our societies, businesses, and economies. The divide between haves and have-nots has never been greater across races, genders, and other minority groups. Whether NASDAQ adopts a diversity criteria or Blackrock threatens voting against less diverse companies, businesses are now compelled to recognize the new reality of bridging the social divide to remain competitive and attract investor goodwill. What businesses like Amazon and Google do to educate and prepare workforces for a new digital world, will probably matter more than merely signing on to stakeholder capitalism treatises without a serious commitment from respective Boards.

During the 2008–09 global financial crisis, many investors deprioritized ESG to focus on solvency. But Covid has served a hard lesson in preparedness for an impending crisis from climatic disorders. In recent years environmental concerns have been growing beyond Europe to Asia and North America. However, it has now adopted a more serious tone when investor associations are mounting pressures on public companies for reporting and disclosing climate-related financial information (climate governance, strategy, risk management, and metrics and targets) as specified by Task Force on Climate-related Financial Disclosures (TCFD). Encouragingly, some consumer-goods companies like Unilever, Colgate-Palmolive, Procter & Gamble, etc. among a growing list of companies, have taken the lead in setting public targets for cutting carbon emissions over the next few years. Therefore, pricing climate-related risks and opportunities correctly is now deemed as important as assessing financial conditions of businesses and is likely to be reflected in company valuations if disclosures are made mandatory for listed companies. Investor demands on Financial Conduct Authority in the UK to make TCFD reporting mandatory for all 480 premium-listed FTSE companies is likely to gather momentum globally. Disregarding environmental and social factors from one’s analysis will be at one’s own peril as much as governance that fails to address such factors. However, standardizing disclosures and ESG ratings across varying E/S/G factors affecting different businesses and geographies remains a challenge.

Beyond evaluating businesses for their ESG risks, investors could create immediate impact on environmental and societal matters by directing their dollars to ventures and infrastructure necessary to create more equitable and environmentally friendly societies. Issuance of “social bonds”-securities tied to helping society, is already taking off in the Asia-Pacific region, and the coronavirus fight could provide one impetus for it to catch up in other regions.

Davids and Goliaths: The pandemic has proven to be a blessing for the largest asset managers (Goliaths) who went on a global binge to rake in re- ups from LPs too scared to begin new relationships with smaller managers in a logistically challenging environment.  First, mega funds already have a strong relationship with their LPs-their LPs trust them. Secondly, part of their appeal is in the consistency of their returns, as smaller funds tend to have much wider dispersion of returns, according to a McKinsey report. However, taking just one example of buyout funds, the best 5 percent of small-cap buyouts have delivered on average 1.5 x the internal rate of return over the same period, compared with mega funds.

In the big reset, the investing paradigm is going to be redefined and it would be unwise to drive one’s car looking in the rear-view mirror for the path ahead in many ways will be new untraveled terrains. It will necessarily require the local insights of specialist managers who are quick to adapt their specialty to an evolving climate. In this milieu, investors would need to be open to diligencing newer managers that might otherwise fly below their radars. However, smaller managers need to stand out from the crowd, and communicate their value propositions effectively. Using digital diligencing tools to sift through investment opportunities would enable investors to quickly determine whether allocating time and resources to a new manager is beneficial.

In conclusion, merely Zooming Past Covid (as discussed in our last post) would be dismissing this seminal event at one’s own risk. What bears watching for us as researchers, due diligence analysts and investors, is how some key issues discussed above and others in the making, reshape, and reset the investment landscape.  “The Big Reset” calls for (a) re-evaluating the original thesis and proposed execution of every existing portfolio manager (b) remaining nimble with lots of dry powder (c) aligning with astute investors (individuals/teams not just brand names) who can seize unfolding opportunities with established networks, local knowledge and responsive execution skills, complementing their heightened awareness of market technicals and the rapidly changing social environment and (d) harnessing the power of technology and flexibility of the new virtual world we have gotten accustomed to, to qualify and diligence new investment opportunities.

In this regard, ÊMA’s new virtual research service, “Virtual Intelligence” is a due diligence-enabling tool that allows LPs to learn remotely about a manager’s strategy, execution and its team without expending any upfront time poring over marketing materials, navigating data-rooms or attending zoom sessions. Virtual Intelligence aims to help LPs qualify emerging managers practicing alternative strategies in both developed and developing markets.

LPs and GPs are welcome to reach out for more details.

ÊMA endeavors to recognize new forces likely to reset, reshape and redefine the global investment paradigm in its efforts to research and due diligence investment strategies and specialized execution teams that can contribute toward LPs’ portfolios. Stay tuned.

Wishing you Happy Holidays and a “happy reset” of your lives in the new year.

Yours truly,

Kamal Suppal, CFA

Chief Investment Auditor

December 17, 2020

The above content is intended for sophisticated audiences as in institutional investors or family offices. Readers are advised that any theme or idea discussed above is not an offer to buy or sell any investment.