Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
All asset classes are experiencing a liquidity vacuum where their value is being sucked out by the deleveraging of credit, Superfund notes. More than ever, the key to investing is diversification in a portfolio, in particular into an asset class such as managed futures funds that offers the potential for performance without correlation to the equity markets, real estate or any other hedge fund style, the firm adds.
Superfund holds the following views on the markets:
Equities: The financial meltdown has repercussions that can last for years. It may take a long while before the equity markets rebound to levels witnessed before the start of the current financial turmoil. For example, investors who held on to their portfolio during the 1929 crash took 26 years to breakeven.
Interest rates: Inflation is here to stay. Real assets will continue to get more and more expensive due to limited supply compared to the US dollar, where there is an unlimited supply. When governments step in and save institutions, taxpayers pay for it but now taxpayers are strapped for cash which means the only way the government can do this is by printing more money. We expect interest rates eventually will need to go up to counteract inflation.
Gold: In current times of financial market turmoil, gold has re-established itself as the ideal security as well as performance leader. We have a medium term price target of $1,500 per ounce. Gold has held its price amid the current financial market turmoil. We expect the uptrend to continue to reach our target price within the next 3-5 years. The huge demand for gold, especially in booming markets like India or China, coupled with the limited supply, with only 170,000 tons existing in the world today, will continue to bolster the uptrend of the gold price.
ôItÆs a great opportunity to buy gold for the long run because, over the next two to three years, gold could double in price,ö says Aaron Smith, managing director of Superfund Financial (Singapore). ôThe reason is because the biggest bubble in the world today is in the US dollar. The US dollar has risen in recent weeks, but spending and inflation are issues that are not going to go away. So, therefore, investors should have a safe haven, which is gold.ö
Superfund has been undergoing a major expansion in the Asia-Pacific region. It currently has offices in Singapore, Hong Kong and Sydney and plans to open three more by the first quarter of 2009 in Jakarta, Bangkok and Mumbai.
Superfund Financial Singapore is a member of the Superfund group of investment companies, a managed futures fund provider founded in 1995 by Christian Baha. In 1996, Superfund Q-AG (formerly known as Quadriga AG) was launched in Austria as one of the first managed futures funds for private investors. As of June 2008, Superfund had $1.6 billion in funds under management.
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