Wingate Asset Management has nearly 20% of their circs $200million FUM allocated to cash. Wingate CIO, Chad Padowitz, says that despite current strength in markets not enough attention is being paid to risk. A fixation on the need for interest rates to be low to deliver growth is particularly concerning. In fact, most of the time through history reasonable interest rate structures are consistent with decent economic growth. What worries the team at Wingate is why interest rates are so low. They see rates as an output rather than a cause of economic growth. Currently, return on capital remains low and therefore interest rates that directly influence cost of capital also have to be low. Ultimately, Padowitz believes the current cycle of deleveraging will see lower returns on assets over time and that returns across many asset classes will be less than current expectations. Exclusive here
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