Part 14 The Role of Real AssetsSlide 2
Though astuteness can\'t be gotten for gold, still les would it be able to be gotten without it. - Samuel ButlerSlide 3
Outline Introduction Real bequest when all is said in done Timberland specifically GoldSlide 4
Introduction Most portfolio ventures are money related resources ,, for example, Common stock Corporate securities Bank CDsSlide 5
Introduction (cont\'d) Real resources : Are expecting an expanded part in a portion of the nation\'s biggest annuity reserves and in private financial specialist portfolios Include timberland and gold Do not have a comparing obligation unless one is made to back the buy of the genuine resourceSlide 6
Real Estate in General Investment qualities Developed and undeveloped property Pension support interest in landSlide 7
Investment Characteristics of land: Immobile Land can\'t be moved Indestructible Land can\'t be demolished Nonfungible Ever plot of land is one of a kindSlide 8
Investment Characteristics (cont\'d) Characteristics of land (cont\'d): Land is regularly a long haul speculation Especially for institutional timberland proprietors Land can be a transient venture E.g., timberland might be utilized for advancement or the extraction of mineralsSlide 9
Real Estate CategoriesSlide 10
Developed and Undeveloped Property Developed property is land with changes on it E.g., shopping centers and condo edifices Purchased by speculators for: Income-delivering attributes The assessment advantage from devaluation of structuresSlide 11
Developed and Undeveloped Property (cont\'d) Undeveloped (crude) property has no upgrades E.g., undeveloped parcels Investors buy undeveloped property: To theorize For the creation of subdivided parts for resale or improvementSlide 12
Pension Fund Investment in Real Estate U.S. benefits reserves have almost $100 billion put resources into land In 2000, the normal annuity finance had around 20 percent of advantages put resources into land Real bequest venture can be advantageous through a land speculation confide in (REIT)Slide 13
Timberland in Particular Introduction Institutional enthusiasm for timberland A timberland venture groundworkSlide 14
Introduction Timberland is an exceptionally practical speculation type of land for vast portfolios The U.S. envelops around 468 million sections of land of timberlandSlide 15
Institutional Interest in Timberland Innovative types of possession in timberland have been created: Public restricted associations Closed-end speculation organizations in timberland Securitized units of timberlands of woodland item organizationsSlide 16
Institutional Interest in Timberland (cont\'d) Examples of institutional premium: Timberland venture administration associations (TIMOs) oversaw about $9 billion in timberland close to the finish of 2001 In 2001, Harvard Management put 6 percent of its $18.3 billion portfolio into timberlandSlide 17
A Timberland Investment Primer Timberland as a benefit Timberland speculators Timberland returns Timberland dangers Problem of absence of data Timberland as a portfolio segment Future prospectsSlide 18
Timberland as An Asset Timberland as guarantee Timberland as a vital speculation Timberland as an immaculate speculationSlide 19
Timberland as Collateral Loans are routinely secured with timberland by: Life insurance agencies The Federal Land BankSlide 20
Timberland as A Strategic Investment Timberland fills in as a vital venture while owning it: Helps guarantee the long haul practicality of an organization or Reduces the instability of an organization\'s money streamsSlide 21
Timberland as A Pure Investment Portfolio administrators hold timberland as an unadulterated speculation: The property is held for its own venture justifies The property is not held as a component of a vital arrangement or to aid extend financingSlide 22
Timberland Investors The biggest current proprietors of timberland for unadulterated venture reasons for existing are: CALPERS John Hancock Financial Services New Hampshire State Employees Retirement SystemSlide 23
Timberland Investors (cont\'d)Slide 24
Timberland Returns Timber develops on the land and is sold and reestablished Growing timber is stumpage The estimation of a remain of timber relies on upon: The volume of wood on the real esatate The size and nature of the trees The market cost of the types of backwoods itemsSlide 25
Timberland Returns (cont\'d) A timberland speculator\'s arrival is an element of: The obtaining expense and offering value Site profitability The capacity of a site to develop timber, relies on upon climate, soil conditions, and so on. Administration capability Silvicultural practices and administration methodologies can influence returnSlide 26
Timberland Returns (cont\'d) A timberland speculator\'s arrival is an element of (cont\'d): Market cost Investors have generous watchfulness as to time of reap Price is affected by the relative size of trees on the landSlide 27
Timberland Risks Biological dangers Economic dangersSlide 28
Biological Risks Biological hazard is the danger of misfortune because of characteristic occasions: Fire Insects Disease Productivity WindSlide 29
Biological Risks (cont\'d) Productivity chance alludes to the likelihood that a remain of timber won\'t create the foreseen volume of wood because of: Species rivalry Drought DiseaseSlide 30
Economic Risks Economic dangers include: Quality Liquidity Demand Price Management hones Changes in the administrative conditionSlide 31
Economic Risks (cont\'d) Management chance implies that poor administration practices can disintegrate the estimation of timberland Liquidity chance exists in light of the fact that there is a generally constrained market for timber and timberland Regulatory hazard comes from statutes and mandates that breaking point backwoods administration and land utilize choicesSlide 32
Problem of Lack of Information Problems with developing a standard timber list: Must consider the development in timber volume Must consider the low instability related with land Focusing on timber costs alone predispositions the arrival descending and inclinations unpredictability upward Timberland is nonfungibleSlide 33
Problem of Lack of Information (cont\'d) Examples of timber records: Wachovia\'s Timberland Performance Index (TPI) The Warnell School\'s Timber Mart South and Timber Mart North Log Lines National Council of Real Estate Investment FiduciariesSlide 34
Timberland as A Portfolio Component Virtually all investigations of timberland find low or contrary connection amongst\'s timberland and other venture choices Allows for significant broadening benefitsSlide 35
Timberland Correlation Coefficients (1960-2000)Slide 36
Risk and Return (1981-2000)Slide 37
Future Prospects Introduction Index issues Social hazardSlide 38
Introduction An expanding number of portfolio supervisors may find timberland as a speculation: Asset assignment techniques are in vogue Timberland takes into account considerable portfolio enhancement Pension assets will presumably keep on being the chief private financial specialistsSlide 39
Index Problems The absence of a predictable timberland file is the single greatest obstruction to expanded venture by annuity reserves: Continuous valuing by the market is troublesome because of: Lack of liquidity Timberland is not a trade exchanged item Regional varieties The evaluation based nature of timberlandSlide 40
Social Risk The timber business considers forestland to be a renewable asset Many earthy people don\'t consider forestland to be a renewable asset The length of reforestation relies on upon the speciesSlide 41
Gold Motivation for gold venture Determinants of the cost of gold The London settle Investing in goldSlide 42
Motivation for Gold Investment People regularly purchase gold in light of the security it is required to give amid times of inconvenience A protection strategy against expansion Particularly articulated in Europe A cash without a nationSlide 43
Motivation for Gold Investment (cont\'d) Gold can be an alluring venture since: Gold has shown gives back that are disconnected or even inverse to those of the share trading system The relationship between\'s the Philadelphia Stock Exchange\'s gold and silver list and the S&P 500 list since 1986 has been 0.14 The relationship is shakySlide 44
Determinants of the Price of Gold Strength of the U.S. dollar Influenced in terms of professional career parities and protectionism concerns The quality of remote monetary forms Stronger outside monetary forms diminish the estimation of gold measured in the home money for outside financial specialistsSlide 45
Determinants of the Price of Gold (cont\'d) Inflation and rising oil costs An expansion in the cost of oil raises fears of swelling and an expanded cost for gold International fund vulnerability Investors swing to gold subsequently of mounting obligation, third-world credits, and so forthSlide 46
The London Fix The London settle is the cost of gold that mirrors the relative purchase and offer requests that have been set with part firms of the London Gold Market The settle is resolved twice every day at 10:30 a.m. what\'s more, 3:00 p.m. London timeSlide 47
The London Fix (cont\'d) Gold costs additionally change in light of: Continuous trade exchanging Economic news Political newsSlide 48
Investing in Gold Bullion Gold endorsements Shares in mining organizations CoinsSlide 49
Bullion Gold bars are bullion There are distinctive sizes of gold bars (see next slide) Investors can gain littler amounts of gold: 1-ounce bars Nuggets Gold tidySlide 50
Bullion (cont\'d)Slide 51
Bullion (cont\'d) Shortcomings of bullion: Subject to burglary No wage efficiency Lack attractivenessSlide 52
Gold Certificates Gold authentications are: Obligations of the guarantor to convey gold upon request Issued by banks Registered in your name Readily
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