Despite financial and political risks and the COVID-19 pandemic, the appetite for Infrastructure Investing continues to rise. Increasing population, aging transportation, outdated data centers and the availability of more efficient green technologies highlights the need for infrastructure investment. Healthy infrastructure has a huge impact on global communities’ ability to thrive and for local economies to prosper. While it seems that managers have been successful in raising funds, deployment has been slow for many managers.
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Recent growth in credit-based investment strategies can largely be attributed to changes in behavior following the 2008 financial crisis. In response to constraints on bank lending as a result of the crisis, borrowers began to seek capital directly from investors. The market for private credit (or private debt) more than tripled in the decade following the crisis, with significant growth in the Collateralized Loan Obligations (CLOs) market as well.
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The end of LIBOR is imminent and we are beginning to see significant volumes of new issuances of both derivatives and cash products referencing risk free reference rates (RFRs). The LIBOR transition period, which terminates at the end of December 2021, is designed for market participants to prepare themselves operationally, technologically and financially for the cessation of LIBOR. With less than one and a half years to go, there are still many questions regarding documentation, fallback language, standardization, term rates, spread application, lags/lookbacks, lockouts and more. Nevertheless, market participants must be able to accommodate both LIBOR and RFR-based transactions during the LIBOR transition period.
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European regulators expect fund management companies doing business in the EU to have effective governance practices. Effective governance means having an active management team that has a firm grasp of its business, and engaged directors who are diligently exercising their oversight responsibilities. In Ireland, these principles are captured in the Fund Management Companies (FMC) Guidance issued by the Central Bank of Ireland (CBI), usually referred to as “the Guidance,” or “CP86.”
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As customers adjusted to pandemic mitigation measures, online orders from western Europe across all retail segments jumped as much as 80% in the first two weeks of April 2020 as compared to the previous year. Experts think these buying habits may become permanent, as the range of products consumers are buying online has expanded to include essentials like groceries and over-the-counter medication.
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To hear more about SS&C’s vision for the future state of alternative investment operations, watch out short video.
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Investors expect fund managers to maintain proper oversight for all outsourced services, including calculation of Net Asset Value (NAV). Management and performance fees are critical components to NAV calculation, and investors would benefit from independent, unbiased fee verification.
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Recently, the Treasury Department and IRS extended several deadlines, including the federal income tax filing due date, which was extended to July 15th. Employers are allowed a deferral of the employee portion of Social Security tax from the end of March through December 31st, 2020. The Medicare portion is unchanged. Participation in the Payroll Protection Program may affect eligibility for certain relief measures.
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