Perspectives from our investment team on the markets, sectors and risks that shape where capital is deployed.
As policy rates settle above the pre-2020 norm, discount rates on long-duration assets have permanently reset. Infrastructure and real-asset sponsors that underwrote at compressed spreads are now refinancing into a materially different market. We expect valuation discipline — not leverage — to determine which portfolios preserve capital through the next cycle.
Margins in physical commodity trading are earned in logistics, documentation and counterparty selection rather than in directional price views. Tight working-capital cycles reward financiers who can price warehousing, quality risk and delivery timing accurately, and who structure security over the cargo itself rather than over the borrower's balance sheet.
Module and turbine costs have fallen far enough that the binding constraint on new generation is interconnection and offtake certainty. Capital allocated to projects with secured grid connection and creditworthy power purchase agreements continues to clear at attractive risk-adjusted returns; capital allocated ahead of those approvals does not.
Spread compression in direct lending has narrowed the compensation for illiquidity just as covenant packages have loosened. We continue to favour secured, milestone-linked deployment over unitranche structures that front-load capital, and we treat documentation quality as a return driver rather than as legal overhead.
Brownfield sites offer location value at a discount, but remediation cost curves are non-linear and frequently underestimated at bid stage. Independent environmental assessment before commitment, and phased capital release tied to verified milestones, remain the two controls that most reliably protect the equity in these transactions.
Compounding is asymmetric: a portfolio that avoids severe drawdowns can afford to be modest in strong years and still outperform over a full cycle. Position sizing, correlation monitoring and pre-agreed exit thresholds do more for long-run outcomes than incremental gains in gross return.
The commentary published on this page is provided for informational and educational purposes only. It does not constitute investment advice, an offer, or a solicitation to buy or sell any financial instrument.