Markets Surge
by Terry Stidham
The U.S. will not end its quantitative easing program (an asset purchasing
program in which the Fed has been buying $85 billion in Treasuries and
mortgages a month in order to provide monetary stimulus) before 2014, according to Christian
Menegatti, managing director of research at Roubini Global Economics. The U.S. central bank has kept benchmark
interest rates close to zero since 2009 and has tried to stimulate the economy
through three rounds of quantitative easing, or bond purchases.
This has meant good news for equity markets, which have gotten used to the flow of easy money. Wall Street's Dow Jones Industrial Average has rallied over 17 percent so far this year.
Private Equity - 130 private equity funds raised $69.3 billion globally in the first quarter of 2013. This is similar to 2012 when on average $73.7 billion was raised in each quarter. However, the total represents a significant upside vs. fund targets of $59.9 billion. Although the LP's have improved confidence they continue to seek firms that can deliver.
VC - VC Funds invested $6.9bn in US start-ups across 841 deals during the first 3 months of this year, up from $6.8bn in the fourth quarter of 2012, which saw 834 transactions, a study by industry database CB Insights has estimated.
According to the analysis, funding for internet companies soared by 12% on a sequential basis during the first quarter of 2013, to over $2.7bn.
Hedge Funds – The Hedge Fund Review reports that the hedge fund industry assets surged by $122 billion to a record $2.375 trillion, with the top ten funds receiving the majority of the new capital in Q1. John Van, VP of Van Hedge Fund Advisors reported that, “The average U.S. hedge fund was up 4 percent through March, while the average equity mutual fund was up only 1.7 percent”.
IPOs - U.S. companies are on track to raise the most money through initial public offerings since before the financial crisis, driven by the same thirst for risk among investors that has pushed the stock market to new highs.
Through Q1, 64 U.S.-listed public offerings had raised $16.8 billion, according to Dealogic. In the same period in 2012, the biggest year in dollars since the financial crisis, 73 companies raised a total of $13.1 billion.
If an investor had bought shares in every IPO raising more than $25 million in 2013, they would be up 15% so far this year, according to Dealogic, matching a 15% gain if they had owned the Russell 3000, which includes large- and small-cap companies, since the beginning of the year.
Mutual Funds - U.S. investors poured $184 billion into long-term mutual funds in the first quarter. With the stock market climbing, investors “are buying at a higher price. But are they overpaying? They’re sick of being cautious and making nothing. They've got kids to send to college. They need cash. They’re telling their advisers to address the issue that they’re not getting enough of a return on their investments.
As they have for nearly two years, taxable bond funds made the strongest showing during the quarter. But funds focused on U.S. stocks showed signs of life, posting their first positive quarter since early 2011, according to a Morningstar Inc. report. Investors plowed nearly $80 billion in new money into all stock funds in the first quarter, compared to net inflows of $5.3 billion a year ago.
Boston mutual fund giant Fidelity Investments saw net inflows of $8.9 billion in the first quarter, and just shy of $3 billion in March, according to Morningstar. A year ago, Fidelity’s net inflows were $4 billion in the first quarter and $425 million in March.
Eaton Vance also saw a dramatic turnaround, with inflows of $5 billion for the quarter and $1.5 billion for March. That’s compared to net outflows of nearly $900 million for the first quarter a year ago and $365 million in March 2012.
Net inflows were $362 million in the first quarter at Putnam Investments, which was hit hard during the Great Recession. It saw net outflows of $60 million in March. A year prior, Putnam’s first quarter outflows were nearly $1.1 billion, and outflows for March totaled $350 million.
In addition to U.S. stocks, international stock funds and alternative investment funds posted strong first quarter flows compared to a year ago. Inflows to international stock funds were about $47 billion for the quarter compared to $5 billion a year ago, while net flows into alternative funds totaled $9 billion for the quarter compared to $3 billion the previous year.
Leon Black with Apollo Global Management recently said that he has never seen such a good debt market. “The financing market is as good as we have ever seen it. It’s back to 2007 levels. There is no institutional memory,” Black said. He believes that rising equity markets and cash-rich corporations are making it difficult to buy and much easier to sell. With interest rates at historic lows, how can someone afford not to be an active investor?
This has meant good news for equity markets, which have gotten used to the flow of easy money. Wall Street's Dow Jones Industrial Average has rallied over 17 percent so far this year.
Private Equity - 130 private equity funds raised $69.3 billion globally in the first quarter of 2013. This is similar to 2012 when on average $73.7 billion was raised in each quarter. However, the total represents a significant upside vs. fund targets of $59.9 billion. Although the LP's have improved confidence they continue to seek firms that can deliver.
VC - VC Funds invested $6.9bn in US start-ups across 841 deals during the first 3 months of this year, up from $6.8bn in the fourth quarter of 2012, which saw 834 transactions, a study by industry database CB Insights has estimated.
According to the analysis, funding for internet companies soared by 12% on a sequential basis during the first quarter of 2013, to over $2.7bn.
Hedge Funds – The Hedge Fund Review reports that the hedge fund industry assets surged by $122 billion to a record $2.375 trillion, with the top ten funds receiving the majority of the new capital in Q1. John Van, VP of Van Hedge Fund Advisors reported that, “The average U.S. hedge fund was up 4 percent through March, while the average equity mutual fund was up only 1.7 percent”.
IPOs - U.S. companies are on track to raise the most money through initial public offerings since before the financial crisis, driven by the same thirst for risk among investors that has pushed the stock market to new highs.
Through Q1, 64 U.S.-listed public offerings had raised $16.8 billion, according to Dealogic. In the same period in 2012, the biggest year in dollars since the financial crisis, 73 companies raised a total of $13.1 billion.
If an investor had bought shares in every IPO raising more than $25 million in 2013, they would be up 15% so far this year, according to Dealogic, matching a 15% gain if they had owned the Russell 3000, which includes large- and small-cap companies, since the beginning of the year.
Mutual Funds - U.S. investors poured $184 billion into long-term mutual funds in the first quarter. With the stock market climbing, investors “are buying at a higher price. But are they overpaying? They’re sick of being cautious and making nothing. They've got kids to send to college. They need cash. They’re telling their advisers to address the issue that they’re not getting enough of a return on their investments.
As they have for nearly two years, taxable bond funds made the strongest showing during the quarter. But funds focused on U.S. stocks showed signs of life, posting their first positive quarter since early 2011, according to a Morningstar Inc. report. Investors plowed nearly $80 billion in new money into all stock funds in the first quarter, compared to net inflows of $5.3 billion a year ago.
Boston mutual fund giant Fidelity Investments saw net inflows of $8.9 billion in the first quarter, and just shy of $3 billion in March, according to Morningstar. A year ago, Fidelity’s net inflows were $4 billion in the first quarter and $425 million in March.
Eaton Vance also saw a dramatic turnaround, with inflows of $5 billion for the quarter and $1.5 billion for March. That’s compared to net outflows of nearly $900 million for the first quarter a year ago and $365 million in March 2012.
Net inflows were $362 million in the first quarter at Putnam Investments, which was hit hard during the Great Recession. It saw net outflows of $60 million in March. A year prior, Putnam’s first quarter outflows were nearly $1.1 billion, and outflows for March totaled $350 million.
In addition to U.S. stocks, international stock funds and alternative investment funds posted strong first quarter flows compared to a year ago. Inflows to international stock funds were about $47 billion for the quarter compared to $5 billion a year ago, while net flows into alternative funds totaled $9 billion for the quarter compared to $3 billion the previous year.
Leon Black with Apollo Global Management recently said that he has never seen such a good debt market. “The financing market is as good as we have ever seen it. It’s back to 2007 levels. There is no institutional memory,” Black said. He believes that rising equity markets and cash-rich corporations are making it difficult to buy and much easier to sell. With interest rates at historic lows, how can someone afford not to be an active investor?
Musical Chairs – We all know the game and
what happens when the music stops. Somebody is eliminated, the music restarts
and the game proceeds until there is only one person left who is deemed the
winner. Can anybody answer what happens
when the music or in this case the presses stop and we still have all of this
capital floating around in the economy?
How will the markets react? What happens to interest rates when the Feds
stops the repos? Is it time to care? Should we care? or as they say in South Louisiana, "Laissez les Bon Temps Roulez".
If you are executing or contemplating an acquisition or investment strategy and need help in sourcing targeted opportunities then contact the business development and deal flow specialists at Target Search Group today.
If you are executing or contemplating an acquisition or investment strategy and need help in sourcing targeted opportunities then contact the business development and deal flow specialists at Target Search Group today.
No comments:
Post a Comment