But while many unknowns remain, there are glimmers of a brighter future ahead. Covid-19 vaccines are going into the arms of citizens around the world, and the $1.9 trillion relief measure rolling out in the U.S. will have huge spillover effects in the global economy. The word “recovery” is on more lips, and the Bank of England’s chief economist said recently that if U.K. consumers spend just a bit of the added savings they’ve built up during the pandemic, it could mean a “rip-roaring” recovery.
All in all, more than a year after the pandemic burst onto the public consciousness, a picture of what a “new normal” could be is slowly emerging. To help investors figure out where opportunities may lie in that new normal, Bloomberg asked five financial advisers for ideas on where to invest $100,000 now. Suggestions range from 5G plays and internet infrastructure to affordable housing for the “missing middle” and ways to play the evolution of the energy sector. Panelists also shared how they would invest the money on a personal passion, with ideas that stretch from abstract art to limited-edition sneakers to original manuscripts of lyrics for Beatles songs.
For those who want to invest around the panelists’ ideas using exchange-traded funds, Bloomberg Intelligence ETF analyst Eric Balchunas provides suggestions for ETFs to explore.
There is still such undersupply in affordable housing for the so-called “missing middle.” This is firefighters, nurses and so on that have fixed salaries and have about 30% of their income going toward their housing budget and rental. The supply for these workers just doesn’t exist in many urban/suburban communities. Think primary, secondary and sometimes tertiary real estate markets where you won’t have a boom-bust cycle, so places like Montgomery, Alabama and Denver, Colorado that are growing fast and need the support of housing.
In part, we’re interested because of cash flow — we want cash flow coming from a majority of the properties, although when there is development involved there is obviously a lag. Unlike with traditional real estate funds, our investors get the benefit of depreciation. There’s also the opportunity for a future 1031 exchange if clients wish. [Investors that sell an investment property can avoid capital gains taxes if they reinvest the money in a similarly valued property or properties within a short period of time.]
How to play it with ETFs: While there is no pure-play multifamily REIT ETF, the Hoya Capital Housing ETF (HOMZ) is composed of 100 companies that represent the performance of the U.S. residential housing industry, and includes some multi-family REITs, said Balchunas. It also holds homebuilders and retail stocks, however, so it isn’t just a REIT ETF. HOMZ, with $59 million in assets, has an expense ratio of 0.45%.
Another way to play from Fruzzetti: I like abstract art, particularly paintings. You have to really love a piece of art rather than simply look at it as an investment, though. I own works by Audrey Flack, a beautiful, accomplished artist. A documentary about her came out last year, called Queen of Hearts: Audrey Flack. When she was younger, her works were in the abstract expressionist movement. Elizabeth Cooper is another artist whose works I own and enjoy — she is abstract contemporary. All of the artists I’m collecting are living.