Stacy Chitty Welcomes All to Alts Week 2022
March 7, 2022 | James Sprow | Blue Vault
Blue Vault’s Managing Partner and co-founder Stacy Chitty welcomed all participants, advisors, broker dealers and presenters to Blue Vault Bowman Alts Week 2022, a virtual alternative investment educational event running from Monday, March 7, through Friday, March 11. He emphasized that the future of alternatives has already arrived. “There has never before been more need for alternative investments and more opportunities for investors to add them to their investment portfolios.”
Blue Vault has been around since 2009, doing objective, third-party reporting and analysis on alternatives. From nontraded REITs, to Interval Funds, Private Placements, 1031 programs, BDCs and Qualified Opportunity Funds, Blue Vault has continued to evolve. In the beginning, Stacy and his partner, Vee Kimbrell, were aware that nontraded REITs were lacking any third-party reporting. Even though nontraded REITs were filing regularly with the SEC, there were no analysts on Wall Street or elsewhere providing investors, potential investors, and financial advisors with objective analysis.
Today, Blue Vault’s coverage has evolved to include BDCs, Interval Funds, 1031s, Private Placements, Nontraded Preferreds issued by listed REITs, and even a complete roster of Qualified Opportunity Funds. And now, all the data that Blue Vault is generating for alternative investments is now available in our online Blue Vault Database, where subscribers can filter, search, and sort our data.
Stacy showed how institutional investors are increasing their allocations to commercial real estate. Ultra-High Net Worth Investors (UHNW) are also increasing their allocations to real estate and private equity. KKR has projected future risk and return metrics for these alternatives and shown how an efficient portfolio frontier can benefit from these allocations over the next ten to 15 years.
In his presentation, Stacy referred to the “Black Swan Events” that have occurred over the last one hundred years, including World Wars, financial crises, the development of the personal computer and the internet, and recently, the Pandemic and the Russian invasion of Ukraine. The increased volatility and more negative returns that occur when negative Black Swan events occur make it unwise to use a traditional “normal distribution” to forecast future returns and risk. He showed how continuously offered nontraded REIT programs, for example, have provided consistently positive returns over the last 25 months, with only one negative month, compared to returns on the S&P 500 with its considerably higher volatility. The returns to continuously offered nontraded REITs fit well with a model of higher returns with higher standard deviations of those monthly returns.
Lastly, Stacy illustrated historical data that has shown how commercial real estate has performed well relative to listed equity markets in times of rising inflation and rising interest rates. The historical evidence is strong that real estate can outperform listed equities in periods of medium and high inflation, and rising interest rates. Given the consensus view that we are facing a year of higher inflation and rising interest rates, this is a compelling argument for increasing allocations and diversification in real estate.
Never before have alternative investments offered more variety and greater capital raise, with constantly improving technology making investing in and holding alternative investments more efficient. The presentations and panels during Alts Week 2022 will make this clear over the days ahead. Thank you for participating in the future!
There are still many sessions to come this week. Register here now!
