By 2033, emerging technologies could combine to create new investment vehicles that will gradually replace stocks and bonds: Citi survey

NEW YORK–(COMMERCIAL THREAD) – The structural issues that challenge today’s capital markets could be addressed by creating a new type of registered investment token that embeds smart contracts into a blockchain harnessing artificial intelligence (AI) and big data technologies to administer contract terms and enforce various investor and issuer rights, Citi’s business advisory services find in their new survey, Industry Revolution – Investment Management in 2033, Part 1: The new building blocks. The new investment instruments, dubbed Ownits and Corpits, could change the fundamental concept of real asset ownership and the relationship between investors and companies, according to the survey’s findings.

Citi Business Advisory Services has partnered with Citi Ventures to solicit contributions from innovation leaders from large investment firms, venture capital organizations focused on fintech, a wide range of emerging companies, academics studying the new platform economy, and other experts focused on the intersection of investment management and emerging technologies. The report, based on 60 exclusive interviews – is part one in a two-part Revolution series – and introduces the new building blocks that can move stocks and bonds over time.

“The industry as a whole is facing a demographic challenge related to the growing needs of retired baby boomers, working millennials and the expanding global middle class. We are moving from a situation where the majority of assets are institutionally directed to one where an increasing share of assets come from individuals, ”said Sandy Kaul, global head of business advisory services. “A majority of this individual wealth is held by investors who do not have the right to access private investments, which limits their ability to obtain a return and diversification to help finance the extension of hope. of life.. “

The survey focuses on three innovation trends which together provide a model for dealing with this situation. Crowdfunding presents asset owners who choose to sell all or part of their assets to an outside entity. Unifying such investment opportunities divides these assets into pieces small enough that average investors can afford to buy and sell such exposures. Tokenization of these units then makes it possible to memorize the terms in contracts which can be divided into smaller and smaller fractions to facilitate liquidity.

“Behavioral changes and technological advancements such as blockchain and AI are accelerating and are irreversible, not only in the investment landscape, but across industries. It is by thinking about how new behaviors and technologies might come together that one can envision the possibility of entirely new solutions and gain a competitive advantage, ”notes Vanessa Colella, Head of Citi Ventures and Chief Innovation Officer. from Citi.

Citi’s investigation presents a framework for how these emerging technologies could be combined to create a digital token that combines financial rights, property rights, and use rights to create a new kind of liquid property unit. or “Property”.

“The appeal of Ownits is not just its regulatory transparency, but how it fits into the current ecosystem of primary issuance and secondary trading,” Kaul added. “This could allow individuals to create very diverse portfolios that cover not only stocks and bonds, but also art, infrastructure, wine, intellectual property rights and more.”

The report also exposes the case of a second type of registered token, extending the Ownit model to companies: these Corporate Exposure Units are nicknamed Corpits.

“There has been a significant drop in the number of listed companies over the past 20 years and in the total number of IPOs. Concerns about increased short-termism in public markets and access to nearly $ 1 trillion of dry powder in private equity markets are encouraging more companies to stay private, especially smaller companies that offer the greatest potential for growth, ”Kaul notes. “This limits opportunities for individual investors and makes it more difficult for employees of private companies to monetize their equity stake..

The types of smart contracts built into the envisioned Corpit would be different, according to the report. The financial measures taken by the company could be linked to the milestones of the growth plan or to the behaviors of a company in key areas such as environment, social and governance or diversity. Bonds are likely to extend to investors as well. For example, different categories of companies could specify different minimum holding periods – from daily to multi-year – and offer proportional variations in voting rights.

Companies could also be used to provide exposure to different elements within a company that are currently untargetable, such as their individual business units or their supply chain.

As the platform economy grows, the survey reveals that companies are embracing permeability. New business models such as crowdsourcing are taking hold in the company and intangible assets are becoming increasingly important sources of differentiation.

“By breaking down a company into a portfolio of investment options, we might see a blurring of the lines between venture capital, private equity and public market investing. This could allow a better construction of the portfolio and an explosion of new investment opportunities ”, concludes Kaul.

Citi, the world’s largest bank, has approximately 200 million accounts receivable and operates in more than 160 countries and jurisdictions. Citi provides consumers, businesses, governments and institutions with a wide range of financial products and services, including consumer banking and credit, business and investment banking, securities brokerage, wealth management and transaction services.

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With most of the negatives taken into account, the worst seems over for Max Financial investors

Max Financial Services (MFS) shares have fallen by a quarter in 2018 so far. Fears of a possible interruption of the merger between Max Life Insurance and Axis Bank to distribute the life insurance products of the first (the bank seeking to enter directly into the insurance sector) and a fundraising for the MFS ‘potential acquisition of IDBI Federal Life Insurance Company weighed on investor sentiment.

The worst seems to be over for MFS, however, as most of the negative news is tied to the stock price, analysts believe instead there could be gains from here. To consider …


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First published: Mon March 26, 2018. 23:56 IST

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Seven smart investment vehicles to add to your holdings in 2018

Most investors know that a diversified portfolio spreads your risk and keeps your returns afloat if one of your investments goes down. The question then becomes: where are the best places to invest your money?

While the stock market offers many options for diversification, it is wise to look beyond Wall Street and find other investment vehicles with solid return potential. We asked members of Forbes Financial Council to share their thoughts on the best stocks to add to your portfolio. From cryptocurrency to health savings accounts, here’s what they had to say.

All photos courtesy of the members of the Forbes Council.

1. Life insurance

Life insurance is more than estate planning. Think of it as a vehicle that allows you to invest in a product that will secure your inheritance while providing you with tax-free income in retirement, if properly structured. – Manuel Vidal, Premium financing group

2. Self-directed IRAs

Self-directed IRAs are a little-known investment strategy once reserved for the very wealthy. The account owner chooses to make alternative asset purchases within the account, usually from investments that they know and understand. Permitted investments include real estate, partnerships, limited liability companies, hedge funds, precious metals and more: anything not prohibited as defined by the IRS. – Jaime Raskulinecz, Next Generation Trust Company

3. Online businesses

It’s easy to get tripped up in the ticker tape. Rather than chasing the ups (and downs) of the market, it’s better to invest your money in something over which you have more control. Consider buying a proven online business that shows steady growth and requires minimal owner involvement. It can be more rewarding both financially and personally. – Ishmael Wrixen, FE International

4. Cryptocurrency

Even the most successful hedge fund managers still cap aggressive portfolios at one percent of total holdings. BTC, ETH, and LTC seem to be the three most popular cryptocurrencies right now, if you are looking to gamble in the space. –Matthew May, Acuity

5. Real estate investment trusts

REITs can add an extra layer of diversification to your portfolio and bring the benefits of increased return and decreased risk. While overlooked, they tend not to correlate with stocks, so when part of your portfolio is going down, they can be going up – and vice versa. It’s also a liquid way to get into real estate without swallowing your fortune in a house. –She Kaplan, LexION Capital

6. 401 (k) account

A 401 (k) is an often overlooked place to save and invest for your future. Many employers provide them anyway, so using your 401 (k) account won’t cost you more, and if your employer has a matchmaking program, it’s really a no-brainer. No matter how close to retirement you are, renew the pledge to maximize your 401 (k) in the New Year and watch your savings pile up. – Shane Hurley, RedFynn Technologies

7. Health savings account

If you’ve maximized your retirement contributions and are looking for other tax-efficient investment vehicles to save for retirement, consider funding your health savings account, if your business offers one. Contributions are not taxable and all funds used for medical purposes are tax exempt. Second, you may be able to invest the funds and use them as a secondary retirement account. – Alexandre koury, Quest for values

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