As we head into 2022, what should investors should be aware of?
We believe that heightened uncertainty and higher than normal volatility will lead to more pronounced market inefficiencies in the coming year. This may possibly create even more opportunities for nimble stock pickers, like Ranger Global, to capitalize on.
What are the most significant risks for the markets in 2022?
We believe the most significant risks facing the market in 2022 are: the trajectory of the pandemic and its potential impact on consumer behavior; a central bank policy error as policymakers shift from accommodation to tapering; and finally to tightening and continued (or worsening) supply chain disruptions and/or labor force anomalies that could fuel inflationary pressure.
Given these risks, what should investors consider in repositioning their portfolios?
Confronting the market in 2022, we believe investors should consider a strategic allocation to asset classes that have historically proven to be a hedge against inflation, such as commercial real estate. It is our view that property types that enjoy pricing power are of particular interest during periods of rising inflation due to their ability to pass higher costs onto tenants.
What type of inflation environment are we in?
As everyone now knows (including Jay Powell), inflation is demonstrably not transitory. Thus, it is our belief that we have positioned our portfolio to potentially capitalize on the current environment by owning property types with shorter lease terms as these landlords can “re-price” on a more frequent basis. We also have a substantial overweight to the Specialty sector as, in our opinion, these property types generally offer the greatest pricing power due to the imbalance of demand over supply.
Are you worried about rising rates?
If rates are going up for what we believe is the right reason – namely, a stronger economy – rising rates often translate to stronger demand for commercial real estate space. For the 15-year period ending December 31, 2017, 88% of rising rate periods have experienced positive REIT total returns (source: NAREIT).
If there is one piece of advice you could give to the average investor for how to plan for 2022, what would it be?
Expectations of higher volatility throughout 2022, will create what we would call a “stock-picker’s market”, and it is our opinion that investors would be well advised to select managers with a demonstrated, long-term track record of successful stock selection.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund. This and other information is contained in the Fund’s prospectus, which can be obtained by calling 888-814-8180 and should be read carefully before investing. Additional Fund literature may be obtained by visiting www.EasterlyFunds.com.
Risks & Disclosures
Past performance is not a guarantee nor a reliable indicator of future results. As with any investment, there are risks. There is no assurance that any portfolio will achieve its investment objective. Mutual funds involve risk, including possible loss of principal. The Easterly Funds are distributed by Ultimus Fund Distributors, LLC. Easterly Funds, LLC and Ranger Global Real Estate Advisors, LLC are not affiliated with Ultimus Fund Distributors, LLC, member FINRA/SIPC. Certain associates of Easterly Funds, LLC are registered with FDX Capital LLC, member FINRA/SIPC.
There is no assurance that the portfolio will achieve its investment objective. The Fund is subject to stock market risk, which is the risk that stock prices overall will decline over short or long periods, adversely affecting the value of an investment. Risks of one’s ownership are similar to those associated with direct ownership of real estate, such as changes in real estate values, interest rates, cash flow of underlying real estate assets, supply and demand and the creditworthiness of the issuer. International investing poses special risks, including currency fluctuations and economic and political risks not found in investments that are solely domestic. Incorporating alternative investments into a portfolio presents the opportunity for significant losses including in some cases, losses which exceed the principal amount invested. Also, some alternative investments have experienced periods of extreme volatility and in general, are not suitable for all investors. Asset allocation and diversification strategies do not ensure profit or protect against loss in declining markets.
Easterly Funds, LLC and Easterly Investment Partners, LLC both serve as the Advisors to the Easterly Fund family of mutual funds and related portfolios. Both Easterly Funds, LLC and Easterly Investment Partners, LLC are registered as investment advisers with the SEC. Mutual Funds are distributed by Ultimus Fund Distributors, LLC, a member of FINRA and SIPC. Although Easterly Funds, LLC and Easterly Investment Partners, LLC are registered investment advisers, registration itself does not imply and should not be interpreted to imply any particular level of skill or training.
As with any investment, there are multiple risks associated with REITs. Risks include declines from deteriorating economic conditions, changes in the value of the underlying property and defaults by borrowers, to name a few. Please see the prospectus for a full disclosure of all risks and fees.
THE OPINIONS STATED HEREIN ARE THAT OF THE AUTHOR AND ARE NOT REPRESENTATIVE OF THE COMPANY. NOTHING WRITTEN IN THIS COMMENTARY OR WHITE PAPER SHOULD BE CONSTRUED AS FACT, PREDICTION OF FUTURE PERFORMANCE OR RESULTS, OR A SOLICITATION TO INVEST IN ANY SECURITY.