Round Table Investment Management is a Fixed Income with over $1B. The hedge fund was founded, in 2007, by Ian G. Banwell, who was the former Chief Investment Officer at Bank of America (NYSE:BAC). Round Table Investment’s Global Macro Fund was down 0.7 percent and 0.58 percent year-to-date.
The hedge fund firm discusses the rebound of the US housing market, and how this episode of recovery will have impacts on asset value. The fund also benefited from positive trends in the housing sector throughout the first six months, and high returns were seen in its Asset Recovery Fund. Banwell recommends investment in the housing market, owing to the large cash yields and absence of any fixed duration risk.
The analysis shares five basic dynamics that are fashioning the market trend in the current situation:
- Firstly, the present recovery of economy is coupled with low credit demand. The assets have to be expanded to meet the growth objectives.
- The present political scenario is sketchy on details. The major economies of the world, the US, China and European countries are going through transitions which makes it hard to predict the future economic decisions.
- Furthermore, the industrial slow down that is experienced all over the world lacks leverage to make recovery.
- The corporate sector has gone through some successful deleveraging which has lead to strong balance sheets but lower margins of profits.
- Finally, a low rate of inflation can lead to sustained economic growth accompanied by low GDP growth.
Banwell is looking at sustainable growth in a positive direction, provided there is a less invasive fiscal and social policy. For now, such policies are seriously hampering growth . On the other hand, central banks have benefited from easing in monetary policies and this can put the economy on the path of recovery in the long run. Similarly the rebound in the housing and corporate sector will generate sustainable profits and growth.
The analysis reiterates that the growing stability in the housing market will have long lasting effects. High demand from owners, investment funds, and rental homes, is directing the business away from its previous distressed state. The boom in the housing market is accompanied with refreshed opportunities in the construction industry as well.
Banwell is expecting a clearer economic picture by the end of 4Q 2012, as by that time the political regimes in U.S.,China, and Europe will probably be finalized. The present uncertainty has impacted the valuation and allocation of assets. He believes that the economy goes through cycles of ups and downs, and for the coming years we will see some major recovery and growth.