Financial Repression And Opportunity Zones, With Andy Hagans

With stocks and bonds trending downward as of late, record amounts of money are pouring into alternative investments, including Qualified Opportunity Funds.

Andy Hagans, co-founder of AltsDb, joins the show to discuss where Opportunity Zones fit into the broader alternative investments asset class and how financial repression is creating an opportunity for OZ investors.

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Episode Highlights

  • The macro view of alternative investments, and how they can fit into a High Net Worth investor’s portfolio.
  • What Vito Corleone and Ben Graham have in common.
  • Macro and structural trends that are driving more assets into alternative assets like Opportunity Zone funds.
  • The size of inflows into alternative assets in Q1, including NAV REITs, BDCs, interval funds, DSTs, and commodity ETFs.
  • How the amount of equity raised by Qualified Opportunity Funds so far this year stacks up against other alternative asset classes.
  • Structural and macro trends that are leading to the growth of alternatives among RIAs and Main Street investors.
  • The best alternative asset classes to hedge against financial repression.

Today’s Guest: Andy Hagans, AltsDb

Andy Hagans on the Opportunity Zones Podcast

About The Opportunity Zones Podcast

Hosted by founder Jimmy Atkinson, The Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in opportunity zones.

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Show Transcript

Jimmy: Welcome to the opportunity zones podcast i’m your host Jimmy Atkinson where do opportunities zones fit into the broader alternative investments asset class. And how is financial repression, creating an opportunity for OZ investors joining me today, all the way from southwest Michigan is my friend and partner at AltsDb, Andy Hagans. Andy, how you doing? Welcome back to the pod!

Andy: Thanks Jimmy you know when you mentioned that financial repression is creating an opportunity for opportunities on investors It made me think of like a mafia mafia guy saying, have an opportunity, you can’t refuse. Yeah that’s what financial repression is, I think, in a way, but it’s it’s good to be here at Jimmy always a pleasure to converse with the OZ community.

Jimmy: And we’ll get into that offer that many investors can’t refuse a little bit later on in today’s episode, but hey, by the way, Andy before we get going, I wanted to make a little announcement about this podcast for our listeners. We are now a video podcast and all episodes going forward are now available on our YouTube channel slash OpportunityDb. So, if you would prefer to watch instead of listen, please find us there on YouTube and hit that subscribe button, I think this is our first or second episode in the video format so really looking forward to that so.

Andy: Jimmy I have to interject it anyone listening right now. You really do need to tune into the YouTube channel jimmy’s looking quite dapper today he’s in his summer wardrobe Jimmy you look great. I love your office i’ve heard so many people ask you if your office backdrop is one of those like green screen zoom backdrops and it isn’t that’s your real office and everybody loves it especially that Notre Dame football helmet.

Jimmy: Yeah that’s right as I like to tell people it’s real and it’s fantastic. So hey Andy to kick things off and before we zoom into opportunities zones. Andy you’re a big macro guy so what’s your macro view on alts?

Andy: Well, I love all it’s obviously i’m The co founder of volts db so I, hopefully, you know, hopefully would like halts as an asset class.

Andy: You know, especially coming out of last year, last year was just an absolutely record breaking year for alternatives, especially non traded.

Andy: You know the private placements that we cover so much at all stevie so many of these segments just had incredible years.

Andy: With inflows non traded reach opportunities own funds, the sts you know vcs are making a comeback interval funds so all of these types of illiquid you know, mainly real estate related private placement offerings had an incredible 2021 now into.

Andy: Obviously, the markets are a little bit rocky right we’ve had drawdowns and s&p and equities.

Andy: Of the bond market forget about whether it’s you know going up or down just look at what it’s paying you in terms of yield.

Andy: Against the backdrop of inflation, so the bond market is not a great place to be, and so, because of that we’ve just seen a lot of continuing inflows.

Andy: into all sorts of alternatives and to all sorts of private placement offerings in the real estate world you know if you think about real estate conceptually Jimmy.

Andy: folks who are able to secure any kind of debt to finance the acquisition of real estate it’s typically going to be below eight and a half percent right.

Andy: I mean unless it’s some sort of high risk, you know construction loan something of that nature.

Andy: And so, in the real estate world we have a lot of sponsors and and buyers who are paying negative real interest rates, so you know, I think, right now, some investors are asking themselves what asset class do I hate the least.

Andy: And i’d be i’d start with bonds and say, I think I hate those the most.

Andy: You know, and then they say, well, I don’t want to be only long on equities, and so you know back to the Mafia so.

Andy: who’s who’s given us offer that we can’t refuse I think a lot of investors are almost forced to take some of that allocation.

Andy: That would normally be in the bond market and they’re shifting into alternatives now that’s sort of a negative way of stating it, I think I think a more positive way to state it is alternatives have also you know, had solid returns for years after you know decades upon decades now.

Andy: When we look at the IV portfolio right that that is sort of a famous thing in the world of alternatives, you know people have realized that there’s this, what is it that liquid premium what what’s the exact term Jimmy.

Jimmy: The illiquidity premium.

Andy: Yes, the illiquidity premium I think that’s caught on so I mean, I think I think a lot of investors were relatively bullish on alternatives anyway, and then.

Andy: Now, with you know any money in the bond market being punished being taxed let’s say with this financial repression, I think it’s just the perfect storm to see continued inflows into alternatives and, in fact, that is what we are seeing in the data.

Jimmy: You mentioned that bond yields are are way behind where they probably should be or where we would want them to be.

Jimmy: I came across this article in The Wall Street Journal over the weekend i’m pulling it up again now Andy it’s the worst bond market since 1842 according to the Wall Street Journal so on top of all that bonds are also.

Jimmy: Down 10% so far in 2022, which is a quite the drop for quite the drawdown for bonds and you know investors on aggregate are really starting to pull out of.

Jimmy: Both bond markets and equities markets but alternative etfs and commodities etfs are soaking up inflows that might otherwise have been headed into those markets so.

Jimmy: Those are the publicly traded somewhat of a proxy for alternatives not not perfect, of course, but but pretty close to what we like to track Andy What about non traded also which is your specialty at all db How have they been performing so far this year.

Andy: Oh well, they’ve been performing very well in terms of inflows you know the sponsors are seeing.

Andy: Heavy inflows and all sorts of segments, and I have this article, and we talked about this article Jimmy the other day on the old TV show.

Andy: let’s talk about the same article here it’s a great article on the DIY or calm and this is an article that citing the most recent report from Robert a stinger.

Andy: And company, and so the fundraising for non traded all totaled almost 33 billion in the first quarter of this year, I mean it’s just the first quarter.

Andy: and Robert a stinger and company here in this article, they are reporting on navarrete non traded vcs interval funds and Delaware statutory trusts DST is the you know close cousin of qof maybe.

Jimmy: A glaring omission, there is qof but we’ll get to that in a minute I don’t want to interrupt you.

Andy: Right so.

Andy: You know, within that 33 billion, a little over 12 billion was just from the non traded reads inflows into the non traded reads.

Andy: And then next after that the non traded vcs saw inflows of nearly $9 billion interval funds had about 7 billion and the DST is had about 3 billion and inflows and again that was just in q1 of this year.

Andy: So you know you talk about the the bond market or bond funds taking a hit Jimmy I think a lot of investors are just saying look.

Andy: Even if even if yields go up a little bit, and of course bond prices and bond yields move inversely right So even if yields rise, a little bit.

Andy: They aren’t getting anywhere close to eight and a half percent they aren’t even close to eight and a half percent and, by the way.

Andy: Even if they were eight and a half percent that would only be holding the real value in a tax advantaged account where investors didn’t have to pay taxes on that nominal yield right you figure, if you have taxable bonds.

Andy: In a taxable account in a non tax advantaged account you’d have to be yielding of far beyond and a half percent to even hold even so.

Jimmy: Double digits for sure.

Andy: Exactly so so prices fall 10% and yields rise 100 basis points or something it’s still bringing a squirt gun to a bazooka fight.

Andy: I think, so I think a lot of investors are just kind of rolling their eyes at these interest rate hikes of 25 basis points 50 basis points when you see that the CPI is eight and a half percent the ppi.

Andy: Talks 1000 basis points right so and we’re seeing all sorts of issues factories being closed ports being closed.

Andy: People being essentially locked in buildings factories being closed all over China, so you figure that’s happening right now.

Andy: that’s still going to percolate through the supply chain, and so you know presuming that a lot of the inflation we’re seeing a supply chain related not only demand side related.

Andy: You know it’s not going to be transitory we’re going to see it for quite some time so Jimmy there’s a lot of reasons that alternatives are doing well, but, but the the financial repression that we’re seeing right now that’s just adding fuel to the fire, in my opinion.

Jimmy: yeah no no argument from from me there Andy I wanted to.

Jimmy: add some more numbers to some of the numbers you just brought forth from that from that di wire article that cited that Robert a stanger and company report.

Jimmy: They did not mention etfs I mentioned etfs a minute ago which are publicly traded alternatives in some sense so fixed income etfs and i’m looking at an article right now, from wealth management COM fixed income etfs.

Jimmy: Through I think it’s about mid February, so not quite apples to apples with the q1 numbers you cited through February 25 fixed.

Jimmy: Income etfs pulled in $1.3 billion of new money and then commodities etfs gathered $8.5 billion of net ETF inflows pretty impressive through just the first I guess that’s the first what is that about six or seven weeks of.

Jimmy: Whether we go also kind of revisiting what I said about that staying a report, it does not mention qualified opportunity funds it doesn’t seem like they’re tracking qualified opportunity funds but good news for us is you know.

Jimmy: I do, and my partners at Nova graphic dude and Nova graphic recently released a port report a few weeks ago that in q1 of this year qualified opportunity funds.

Jimmy: In their survey raised $3.97 billion almost $4 billion, and they estimate that the actual numbers likely three to four times higher than that because no regret it only actually serves a small subset.

Jimmy: Of the total qof universes my longtime listeners would know so that would actually put us in the range of 12 to $15 billion of capital raised.

Jimmy: For q1 of this year, which would put overseas as an asset class roughly on par with navarrete so which is, which is pretty impressive I mean it may very well be that qof Sir, basically, the largest alternative asset class they’re very high up there at least.

Andy: Well, to me, I to interject there, though yeah it’s it’s interesting because last year 2021 was a great year for the markets.

Andy: Right and so with a qof you have that 180 days to place your capital gain your realized capital gain so don’t get me wrong i’m very bullish on qof.

Andy: In the in the long term, in the medium term, and even in the short term, but I wonder if the qof inflows will be a little bit.

Andy: more like a roller coaster because as investors see fewer capital gains into this year right.

Andy: As we’ve seen inflation really take off and the stock market drawdown and the bond market draw down I think there’s going to be fewer capital gains.

Andy: sitting and sitting in the income status the personal income statements of investors in in like q1 of this year.

Andy: Possibly q2 of this year so that’s probably going to affect the inflows into qf in q3 and Q4 of this year right because investors basically need that capital gain to write the check to the qof sponsor.

Jimmy: yeah That may be true Andy and I i’d like to kind of take a research dive into that a little bit more at some point in time.

Jimmy: Certainly, as you know, equities run up up and up and up and up and up there are more and more unrealized capital gains for potential qof investors to tap into that was a.

Jimmy: point I made it on my podcast numerous times throughout the course of 2021 hey we’ve got this big run up since the end of the.

Jimmy: Last recession, what about oh nine or so and even after the little dip that we took during coven it’s run up tremendously since then, just in the past, what about a couple years now.

Jimmy: That certainly led to a lot of investors with a lot of capital gains I kind of wonder, though, if if you know this little drop in the market might, you know as we kind of mentioned.

Jimmy: Some there’s a bit of a drawdown happening within the markets that some people might be pulling some capital off the sidelines if they have.

Jimmy: gains that are locked in for a decade or more, I mean they’re still doing quite well they are still sitting on quite a bit of gains.

Jimmy: What do you think there any do you think if if the markets continue to to go down we’ll have some people pulling out strategically at certain points in time and they’ll probably still have gains right.

Andy: Absolutely Jimmy and it well let’s talk about logical behavior and maybe a logical behavior.

Andy: yeah yeah so you know investors are sort of famous for pulling out after the dip right now the peak but, but after the dip and like you say.

Andy: You know, a 15% drawdown or even a 20% drawdown it’s not that big of a deal for an index fund that you bought in 2005 or 2010 or even 2015 or 2016 right you’re still probably sitting on.

Andy: quite a bit of a game there and I think you also need to look at that overall portfolio and I think investors.

Andy: In all types of investors, not just individual investors institutional investors pension funds are souring on bonds right now and and for good reason, so i’ve.

Andy: i’ve mentioned financial repression several times already, and you know what i’m Jimmy I just went ahead and googled it in case we have any.

Andy: case we have any listeners right now, maybe you’ve heard the term thrown around or aren’t sure if its exact technical definition, this is what the Google says okay.

Andy: Financial repression comprises quote policies that result in savers earning returns below the rate of inflation and quote to allow banks to quote provide cheap loans to companies and governments.

Andy: thereby reducing the burden of repayments and quote and then here’s a little color commentary from Wikipedia I guess it can be particularly effective financial repression, that is, can be particularly effective at liquidating government debt denominated in domestic currency.

Andy: Right so.

Jimmy: This is a wealth tax essentially.

Andy: that’s it’s a savers tax.

Andy: Tax on.

Andy: Senior citizens attacks on pension funds, I mean a lot of funds, by the way, are more or less legally required.

Andy: To have a certain percentage a high percentage of their assets in bonds So could you imagine you know, having to finance pensions, right now, where.

Andy: inflation and the CPI is eight and a half percent and bonds are pain, you know order of magnitude.

Andy: Less than that, I mean it’s it’s it’s borderline or maybe outright immoral of a policy, I would say, or an unethical policy to tax savers in such a way, but more to the point.

Andy: Because there’s no I mean as an investor, I think you have to be a little bit objective and passionate about this, more to the point, I think a lot of investors have just realized.

Andy: In a period of financial repression, where bond yields are negative 5% in real terms.

Andy: I can’t afford to have 40% or 50% or more of my portfolio and bonds, so I think there’s there’s the carrot and the stick to me, so you were talking about.

Andy: The carrot is i’m an investor and i’m still sitting on gains, even though we’ve had a market drawdown I still you know I have this index fund that I bought way back in 2009 so.

Andy: i’m still sitting on quite a sizeable capital gain that’s the carrot the stick is looking at my portfolio goodness gracious I have got to get out of these bond funds, and I mean personally.

Andy: I don’t tell people to like liquidate all of their bonds or do not have a certain percentage still allocated to them as ballast, but when negative real when real yields are negative 5% I think investors have to react to that you have no choice right it’s that offer that you can’t refuse.

Jimmy: that’s right i’m kind of expecting Vito corleone to walk into my room at any point in time here.

Jimmy: hope that doesn’t happen, but OK, so I think I think there’s there’s two things that you’re hitting at least i’m picking up on two things Andy one is.

Jimmy: i’m just considering an investor’s asset allocation right now let’s just consider like a pretty plain vanilla 6040 stock to bond asset allocation pretty traditional.

Jimmy: investable asset allocation for most high net worth investors.

Jimmy: You know if you’re sitting on that, for the past few years and maybe you haven’t rebalanced in a while you’re likely overweight and stocks anyway, you might want to draw down some of your stocks and then.

Jimmy: The the opportunity zone incentive makes a great place to park that if you don’t want to necessarily plow it into bonds as, as you mentioned, with the financial repression in mind that gets me to my second point, which is maybe 6040.

Jimmy: Is kind of outdated in today’s macroeconomic environment with this financial repression is 40% too much of a balance to have in your portfolio when the ballast isn’t even really acting as a ballast these days.

Andy: Well, that that’s who that’s a good question Jimmy you put me on the spot, no I love it I love being put on the spot, well, first let me give my standard financial disclaimer.

Andy: i’m not giving investment advice to any individual person always check with your tax or financial advisor yada yada yada you get it.

Andy: So I think first of all depends on investors time horizon right, so the.

Andy: That sort of a nice portfolio to site, but it’s it’s sort of independent of time horizon right, so a lot of institutional.

Andy: It will use the 6040 that they’re sort of have an ongoing need for wealth preservation, but they also want growth and income.

Andy: A lot of times you will hear you know, once you hit retirement age, then you’ll gradually.

Andy: Go glide along to a 4060 portfolio which is 40% equity 60% bonds or in the other direction, you know if you’re 25 if you just.

Andy: opened your IRA or just started saving your 401k you don’t need to put 40% in bonds so it’s all sort of a sliding scale, but in general Jimmy it seems like.

Andy: It would be prudent to just trim down so like if your normal target portfolio is is 30% bonds, maybe trim it down to 25 if it’s normally 40 maybe trim it down to 30 I mean a lot of this also depends on an investor’s.

Andy: capacity to whether a drawdown without.

Andy: You know, making that behavioral mistake of selling equities like at the bottom and so that’s where the the bonds the portfolio ballast come in handy but I honestly come from the Ben Graham school.

Andy: Which is he recommended as a default as a starting point, of course, you also have to examine the historical context where bond yields are very, very different.

Andy: way back in the day when the intelligent investor was being written right.

Andy: Ben Graham he’s he’s like the godfather of value investing but his rule of thumb was you could have as high as 75% of a portfolio and bonds or as low as 25%.

Andy: And an investor should adjust that based on current conditions so like, for instance, financial repression, being a current condition that in an investor would react to.

Andy: But he had that rule of thumb is 25 as sort of a hard stop as sort of a hard minimum of bonds in a portfolio just to provide that ballast.

Andy: And they’re also a form of dry powder right So if you can envision that maybe there’s a further draw down in equities market.

Andy: it’s good to have some dry powder, to be able to rebalance into equities when the equity is right or down right because that’s the best time to buy into the stock market after a major draw down.

Andy: So you know I think I answered the question, maybe it gave a little bit of an asterisk but I personally in my own portfolio, about a year ago I adjusted my target downward.

Andy: Because I just I looked at I looked at it, and this was before the CPI was eight and a half percent, but I could sort of see where things were going it see some of the.

Andy: policy decisions being made at the federal level in the United States and then also globally.

Andy: Frankly, with some of the decisions being made in other countries that affect our supply chain and inflation in this country but.

Andy: I sort of had that sense this is going to get a lot worse before it’s going to get better I was never on team transitory.

Andy: And so you know I personally adjusted that target down for my own portfolio and I think a lot of other investors did the same, I mean we’ve had.

Andy: folks in Washington we’ve had the the President for a while not anymore, but for a while, was saying, you know we think this inflation is transitory.

Andy: I think, very few people were believe that you know even six or nine months ago, and I think a lot of investors frankly already did pull money out of the bond markets and.

Andy: Obviously the inflows that we talked about into all these alternatives both both etfs like liquid all.

Andy: But also, you know the data that we talked about with the non traded alternatives, I think it shows that investors were taking not only capital gains, but they were probably also liquidating some of their fixed income assets to put into alternatives.

Jimmy: Sure, so going back to that example of you know if you’re drawing down your the bond portion of your portfolio from let’s say 4230 or from 30 to 25.

Jimmy: You know somewhere in that range where where is that allocation going toward is it going back toward stocks stocks.

Jimmy: Maybe overvalued right now there’s certainly been volatile the past few months here, or is there an opportunity here.

Jimmy: For alternative assets is that why we’re seeing this increase in assets being amassed in in alternative asset classes and is this why we’re seeing popularity surging in qualified opportunity fund investing.

Andy: Well, absolutely Jimmy I think it is, I mean I think historically real estate has proven to be a pretty darn good.

Andy: segment to invest in during periods of higher inflation, higher sustained inflation, I would say that the devil is in the details, though.

Andy: Right so in So when I when I say real estate, by the way, that’s the real estate is the 800 pound gorilla when we’re talking about these illiquid all these non traded adults, you know you also have.

Andy: Things like gold etfs and commodity etfs but, at the Alternative Investment database we’re more covering that private placement side of the industry side of the space.

Andy: You know, typically these are products geared for accredited investors with investment minimum minimum investable amounts of like 100,000 or sometimes even higher 250,000 or more.

Andy: But there’s all all sorts of types of different options, but a lot of them are linked to real estate or own real estate assets.

Andy: And you know if you think about debt financing, for instance, just, for instance, if you’re able to purchase an asset let’s let’s say a multifamily asset.

Andy: Or maybe a hospitality asset those assets, have the ability to generate increased income, along with inflation right, so if inflation is 8% a year, maybe rents go up 8% a year.

Andy: Obviously, things can be a little stickier than that, so that there is a little bit of risk there, but with the hospitality asset, for instance, you know, a hotel can replace their their room rates every single day.

Andy: Right, not every segment of real estate has that ability, for instance, some triple net leases or longer term.

Andy: Retail leases they’re not going to have quite that short term pricing power to reprice rents, along with inflation but generally generally.

Andy: Real Estate owners have that choice right, and so, if you’re able to borrow money and get debt financing at an interest rate of four and a half or 5% or even 6%.

Andy: and inflation is running eight and a half percent of here well i’ll take that deal all day long right, I mean.

Andy: i’m literally borrowing money at negative real interest rates and investing in an asset that has that ability to increase, you know the yield from that asset.

Andy: In line with inflation and that’s even in the abstract, you know absent any sort of strategy or anything and you mentioned to me when I think of a lot of the.

Andy: You know the pitches that I saw at the last josie pitch day and I understand that we have another oC pitch day coming up in July.

Andy: But a lot of these projects have very interesting strategies, whether it’s you know, investing in Silicon Valley or investing in the sun belt or just targeting areas where there’s just huge demand for multifamily.

Andy: And so they’re even adding value, you know at that operator at that strategic level as a sponsor over and above the sort of abstract.

Andy: You know, built in advantages that they have in an area, you know, this time of higher inflation, so I think if if an investor is is you know adjusting their portfolio.

Andy: To hold fewer bonds or lower amount of bonds from let’s say 40% to 30% of the total portfolio something like that.

Andy: I do think a lot of that money is going into alternatives it’s going into real estate specifically and I don’t really see a catalyst for that to change anytime soon, because.

Andy: If you’re borrowing money, especially at an interest rate that is lower the inflate than the inflation rate inflation is not really a bad thing.

Andy: So it’s it’s sort of you know it’s I don’t know, is it politically incorrect for me to say that Jimmy I said.

Andy: You know, for a lot of real estate investors inflation can be good, or at least at least it has pros and cons that maybe balance each other out versus the bond market it’s just straight bad there’s no upside to the high inflation that we’re seeing.

Jimmy: yeah I think that’s right Andy and you know, for me, personally, I did the same thing that we’re discussing you know, last year.

Jimmy: I saw my portfolio was kind of out of whack I hadn’t rebalanced in a while I was overweight and stocks I didn’t really want to just shift them into bonds, so I pulled some chips off the table, and I put them into all I put them into real estate and private equity and.

Jimmy: fingers crossed it works out but i’m sleeping a little more comfortably at night, my portfolio is a little bit more diversified and I think it’s hedged against inflation and these other.

Jimmy: Macroeconomic trends that are kind of you know, acting as a headwind against more traditional markets so any we’ve been discussing a lot of the.

Jimmy: Macro trends during the course of this episode and why that’s leading to an increase in popularity in opportunity zones and also more broadly.

Jimmy: You know, inflation financial repression stocks potentially being overheated are overvalued, what about structural trends what what are some structural reasons why all are continuing to amass more interest from investors and more assets at the end of the day.

Andy: That is a great question and, and I would have pointed to things really transparency and access.

Andy: So number one i’ll start with transparency, I just think in the in the age of the Internet, obviously arm and but even just more media covering the space and more technological.

Andy: Products publishing information about alternative products there’s just a lot more information about various alternative products.

Andy: And it’s easier for an everyday investor even a retail investor like you or I to access that information it’s also easier for a financial advisor.

Andy: To access that information, of course, you know a lot of advisors, a lot of our as family offices their time limited right, so they don’t have.

Andy: endless hours to go research, the stuff but but frankly there’s just there’s more information, but I would also say, better information, depending on on your resource online that you’re looking at.

Andy: But the other aspect their access right, obviously we have crowdfunding platforms now so so really I mean that’s like totally.

Andy: democratized access to alternatives with crowdfunding platforms, but even with private placement offerings that are geared for accredited investors.

Andy: You know, with investment minimums of 50 or 100 or $250,000 there are more of those products available.

Andy: more of them are registered as 506 C offerings were a retail investor can go and buy them directly, whether we’re talking about.

Andy: DST is whether we’re talking about Q laughs non traded reads other kinds of private equity funds it’s just a little bit easier.

Andy: To invest in these products than it was 10 years ago certainly versus 20 years ago and I think these two aspects, the informational aspect and the accessibility aspect.

Andy: It seems like they’re they’re both constantly improving like a little bit every month, every year, you know it’s like every month, it.

Andy: gets like 1% easier every quarter gets 1% easier to invest in this stuff maybe you don’t notice that day to day, but over a period of like five years, I think it just makes a massive.

Andy: Change and so Those are the two main structural reasons that I think have been a big tailwind for the auto industry and and also frankly for for qof rightly you host these oC pitch days.

Andy: And we know that the right after the pitch day folks that that watched the presentations you know they’re essentially firing up their bank account.

Andy: filling out some paperwork and you can do a Hello sign or a docusign and you can be wiring money the next day like literally the next day.

Andy: Which is a good thing, because sometimes people are right up against their hundred and 80 day capital gain deadline so it’s Nice that it’s a little bit easier I don’t like paperwork anymore than the next investor right.

Jimmy: Right right yeah and, by the way, we’re.

Jimmy: we’re celebrating this year in one way I guess the 10th anniversary of the jobs act of 2012, which is what brought into.

Jimmy: Creation the Rule five or six see under Regulation D i’m getting kind of nerdy now about securities laws, but essentially allowed what you’re talking about Andy these.

Jimmy: These larger private placements funds, large and small private placement funds to be able to source capital directly from.

Jimmy: retail investors guys like like you and me, I mean I don’t know if we’d be where we are today with pitch day and and opportunities zones if it weren’t for.

Jimmy: Rule five will succeed because all those funds that pitch on that day, or are offered under that.

Jimmy: rule by the way, if you’re under securities laws and you want to learn more i’ve got an interview coming up with.

Jimmy: An oC attorney and securities attorney Connie rathbone in a couple more weeks so again be sure to subscribe to us on YouTube and your favorite podcast listening platform Andy What about.

Jimmy: We kind of bringing it back to the the macro view now inflation financial repression, what are some of the best asset classes to hedge against that.

Jimmy: we’re talking about you know broadly all being a great place to go if you’re worried about those trends, but within all within opportunities zones, maybe, what do you like, as asset classes to go into as a hedge.

Andy: I love multifamily i’m not going to make going to pretend that I don’t I mean honestly, there are a lot of different segments in real estate.

Andy: That, I think could look appealing even you know the CAP rates of compressed right, so these assets are priced higher but, but even so I still think it’s possible to find especially relative value.

Andy: But multifamily Jimmy you know this this nation has a shortage of 5 million or more housing units and so there’s just so much demand, especially you know I noticed the sponsors are very active in the sun belt in some of the southern states that have less you know onerous regulatory.

Andy: Agencies it’s just a little easier to build because of the tax burden so on and so forth, so I think especially multifamily in the sun belt in a lot of these states, you know Texas Florida.

Andy: i’d also say you know you asked me about all this and i’m a big old cheerleader, but I just think it’s good for investors to remember that if you are a net saver.

Andy: it’s great when the stock market drops down right because it’s like it’s there it’s going on sale, if you go to buy your vdi or your index fund it’s on sale today it’s a 15% sale versus you know what it costs three or four months ago, so.

Jimmy: Sometimes even three or four days ago.

Andy: yeah exactly.

Andy: Exactly, so you know if you’re if you’re net saver.

Andy: i’d say absolutely i’m bullish on real estate, in the long term, I think, especially tax advantage adults for high net worth accredited investors are just a great vehicle for those investors to grow their wealth.

Andy: I still remain long publicly traded equities as well.

Andy: And and honestly I still have that allocation to fixed income so to me it’s all about that balanced portfolio, I think, different investors have a different appetite.

Andy: For what you know what amount of their portfolio they’re willing to be liquid and that’s Okay, you know for one investor, it might be 5% another might be 10% for another.

Andy: It might be 20% once you get into ultra high net worth or family offices that number tends to be higher, you know which is appropriate for their situation.

Jimmy: Well, great great insights as always Andy it’s been a pleasure speaking with you today, before we go where, can you tell our listeners to go to learn more about you and also db.

Andy: Well Jimmy you and I co host the Alternative Investment podcast where we share a lot of tax advantaged strategies for high net worth investors.

Andy: And advisors to grow their portfolio and that podcast is available on all the major platforms, you know spotify apple podcasts if you just search the Alternative Investment podcast.

Andy: it’ll pop right up you’ll see Jimmy in my smiling faces, you can click that subscribe button and of course we’re also on YouTube so if you’re watching.

Andy: This opportunity zones podcasts on YouTube you can just click on stevie keyword in YouTube and it should show show up there too.

Andy: And later on this year in December we will be hosting an investor event.

Andy: But as long as you subscribe to our show on any listening platform or on YouTube we’ll we’ll talk about that later this year so very excited for that we always have a lot of fun at our events and very excited for our pitch day that we have coming up in July at opportunity db.

Jimmy: that’s right into the next Tuesday pitch days coming up July 28 2022 one day online investor matchmaking event where investors with capital gains can.

Jimmy: find qualified opportunity funds to consider investing in and then that event at all db that you referenced Andy will be all Expo 2022 that’s coming up in December.

Jimmy: For our listeners and our viewers out there today I will, as always, have show notes available on the opportunity zones database website at opportunity db comm slash podcast.

Jimmy: And there will, we will have links to all of the resources that Andy and I discussed on today’s show, please be sure to subscribe to us on YouTube or your favorite podcast listening platform to always get the latest episodes Andy thanks again.

Andy: Thanks Jimmy.

Andy: That was awesome.

Jimmy: That was good.

Andy: Would you think.

Jimmy: It was good man I liked it.

Andy: That was gonna it’s gonna be one of your longest that.


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OZ Pitch Day

June 13, 2024