ATLANTA — Globalization is the most powerful economic trend, making shipping, shipbuilding and commodities growth areas, famed investor Wilbur Ross said, but until recently, small investors haven’t had access to the types of alternative investments that can exploit those sectors.
Ross, who became a billionaire turning around distressed companies, is now a portfolio manager for Atlanta-based Invesco, which began offering a handful of mutual funds that package alternative investments such as derivatives, energy, currencies, commodities and real estate.
“We believe the most powerful economic force in the world is globalization,” Ross said. “And, whatever else it may mean, it certainly is going to mean rising standards of living in developing countries, which is where most of the population lives. When you’re talking per capita incomes of $1,000 a year, a rising standard of living may be mean one thing: Increased consumption of commodities.”
Georgia is getting in on the globalization trend by deepening the Savannah River to accommodate larger freighters. The port of Savannah is already the fourth-largest and fastest-growing port in the country, making it the state’s most powerful economic engine behind the Atlanta airport.
Small investors also can benefit, according to Ross.
“How will they get the commodities? By ship. How will they pay for the commodities? By re-exporting something else by ship,” he said. “We think shipping is a way to play the commodities market … and is a commodity itself.”
Well-heeled investors and institutions have long used alternative investments to balance their portfolios during periods of volatility and find pockets of growth when stocks and bonds aren’t performing.
Invesco President Marty Flanagan said alternatives can broaden diversification and lower risk in addition to boosting returns for people who don’t have a $1 million portfolio, just a modest IRA.
“A really important thing that has developed over the years is that you can now have
a mutual fund with asset classes that were very difficult to include historically,” he said.
Evolution of various markets has brought better oversight and transparency for consumer protection and enough trading volume to provide the liquidity needed for fund managers, Flanagan said.
“It really is very different from five to 10 years ago when it was very difficult for individuals to gain access to a grid of asset classes,” he said.
For example, buying oil wells and real estate directly takes deep pockets and a long-term horizon because there has traditionally been no way to buy today and sell tomorrow. The Invesco funds overcome those hurdles by pooling the money of hundreds of investors the way stock and bond mutual funds have operated for decades.
The funds also provide geographic diversification by investing globally in what another Invesco money manager, David Millar, calls “good ideas.”
“We search the world looking for what are fundamentally good ideas for long-term growth,” he said.
That’s why he isn’t spooked about investing in Europe despite weakness in Greece and Spain or Russia’s threats to Ukraine.
“We don’t want to react to what’s going on right now. We want to be looking through the cycle,” Millar said.