Liquid Assets Booming As A Result Of Unfavourable Real Interest Rates

0
Liquid Assets Booming As A Result Of Unfavourable Real Interest Rates
Megan_Rexazin / Pixabay

The unsavoury conditions surrounding bank deposits and rising distrust in the traditional finance sector has resulted in a boom for liquid alternatives. The real rate on short deposits is lower than inflation, the yield on bonds has not increased, and in the stock markets the price-profit ratio scares investors.

Play Quizzes 4

Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q4 2020 hedge fund letters, conferences and more

The Appealing Essence Of Liquid Alternatives

However, society is not yet ready for mainstream adoption of such solutions though, as people are frightened to invest in these alternatives due to high transactional costs. However, the liquid essence of these products is extremely appealing because of negative real interest rates. The CBS has succeeded in pushing capital outside of traditional savings products like deposits and fiat into liquid alternatives.

Voss Value Sees Plenty Of Opportunities In Cheap Small Caps [Exclusive]

investFor the first quarter of 2022, the Voss Value Fund returned -5.5% net of fees and expenses compared to a -7.5% total return for the Russell 2000 and a -4.6% total return for the S&P 500. According to a copy of the firm’s first-quarter letter to investors, a copy of which ValueWalk has been able Read More

In general, the market for alternative investments is in a very “hot” state, and digital assets are finally starting to take their rightful place in the capital allocation matrix. At the moment, the bubble is not specifically in cryptocurrencies, but in alternative investments, because prices have risen not only for cryptocurrencies, but also for luxury real estate, paintings, as well as rare cars.

However, as soon as the real rate becomes more than zero, an outflow from the sector of alternative investments can be expected. Until then, money will continue to flow into digital assets and other liquid and illiquid investments.

Article By Gregory Klumov, CEO of STASIS

Updated on

No posts to display