Spy has been in London this week, enjoying several Campari and soda. The atmosphere is totally schizophrenic. Rising interest rates have spooked everyone and yet they look at US stock markets on the verge of another bull market with talk of ‘hard landings’ receding. Speaking to asset managers, venture capital firms and private investors got almost the same response: a palpable fear that things were on the verge of falling apart but everyone was wary to take any drastic action. Spy’s conclusion: it is time to hit the beach.
Have you been able to secure a Taylor Swift ticket for her latest global tour? Spy did not get one either, if it is any compensation. The pulling power of music, live or otherwise, remains undiminished across the globe. Unsurprisingly, the launch this week of a fund, the elegantly ‘tickered’, MUSQ, a Global Music Industry ETF, caught Spy’s eye. This thematic strategy, which is investing in all things music, might allow music fans to profit from the industry they love to consume, even if tickets to leading acts themselves are almost impossible to come by. The blurb states that the fund, “seeks to offer exposure to global, exchange-listed companies, exchange traded funds and royalty trusts – all with a core business interest in the global music industry”. Spy is happy to give this one a big round of applause.
Speaking of music, Korea, home to the K-Pop phenomenon, is the focus of a new strategy by Asia investment veterans, Matthews Asia. The San Francisco-headquartered manager has just launched an ETF strategy targeting Korea, where entertainment will possibly form part of the mix. The country is home to numerous companies and brands that are growing their exports at a phenomenal pace. Korea is, of course, home to numerous vibrant sectors: semiconductors, new energy vehicles, information technology, biopharma and new era commerce, to name a few. The highly-concentrated Matthews Korea Active ETF has been listed on NYSE’s Arca, with an expense ratio of 0.79%. The strategy is managed by Michael Oh, Elli Lee, and Sojung Park.
Is it a sign of the times that yet another manager has reached the $1trn dollar in AuM mark? This not-quite-as-exclusive club now includes Blackstone, the alternatives manager. Spy understands this is the first time a non-traditional manager has hit the BIG mark. With individual firms such as Apple, Nvidia, Google, Microsoft, etc reaching the $1trn mark in market cap in the last few years, it seems that $1trn is the new $100bn. By far the biggest portion of Blackstone’s assets are in property. It has $333.2bn in assets under management in the sector as of June 30. This was up 1% from $331.8bn at the end of the first quarter and up 4% from $320bn year-over-year.
Blackstone’s rise in property assets seems all the more impressive, when one considers the dire state of much uber-prime real estate in cities such as London, New York, San Francisco and Paris. This image from Bianco Research was shared with Spy this week. Office property continues to struggle as knowledge workers come into the office far less frequently. Shopping malls are also facing hard times as online retailers gather more sales. If a picture says a thousand words, this one makes for ugly reading.
Spy came across an article which he thinks should be required reading for all wealth managers and portfolio managers. It is titled, The Art of (Not) Selling and is written by Chris Cerrone, of Akre Capital Management. Chris makes the astoundingly good point that, “Selling something you know well, to buy something new that seems better, is a dangerous game. We have been bitten by this more than once.” Getting to know companies and their management takes time and the time invested can pay off but that also requires some patience. When the rewards do arrive, they often come rapidly, but typically after a lengthy period of growth. Well worth reading the entire piece.
Spy’s quote of the week come from the author Cormac McCarthy, who wrote No Country for Old Men, and who died recently. “If trouble comes when you least expect it, then, maybe the thing to do, is to always expect it.” That applies to life as much as it does the investment markets.
Until next week…