(May 9, 2013) – There’s more to securing David Swensen-style returns than beefing up on hedge funds and private equity, cautioned Morgan Stanley’s Chief Investment Strategist David Darst.
“60% of endowment portfolios that are over $1 billion are in alternatives,” Darst said during his “Morning Market Call” to open the 2013 Skybridge Alternatives Conference at the Bellagio Hotel in Las Vegas.
“Everybody’s trying to copy David Swensen. It’s like you, when you were a child and watching science experiments on TV. Then you try to follow along and you blow yourself up.”
The Morgan Stanley managing partner advised the vast room of hedge fund managers, service providers, and investors that the US stock market would be a wise place to invest because other investors haven’t been pursuing it aggressively.
“Where have institutions been putting their money? Alternatives!” He listed off the various kinds of asset allocators-banks, insurance companies, individuals, etc.-and said all of them have been focusing on unlisted assets.
Furthermore, Darst said that nationwide economic growth would fuel public equities markets. “The United States is entering the third or fourth inning of its recovery,” he said. “It meets none of the criteria for a double dip: Is the Fed tightening? No. Are bond yield spreads widening? No, they are still getting narrower.”
“Be prepared for a big four to five year upwards US dollar move.” Innovations in the science and technology sectors will drive a strong economy, Darst projected, while emerging markets will provide consumers for that output.
A final area on which the high-energy Darst was bullish: women’s rights. “This will be the generation that is about the abolition of the oppression of women.”
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