Asset Abu Dhabi - Building for Resilience - What Investors Need To Know

foreign [Music] this is a very crucial and dangerous time in history for the World At Large global climate change is severe not be 100 years from now governments are battling inflation and trying to stabilize their own currencies investors are anxious as we are entering a more difficult economic cycle civil Strife is occurring throughout the world including our own backyard and the risk of war and among great Nations is rising if all these risks materialize the entire system failed and therefore we lose both individually and collectively so to rethink the future of investment to make it sustainable resilient and leading to the common good [Music] over the last couple of years we've been working to build a new company called Atlas that brings together the private and the public sector to address this macro risk in a more Collective and integrated manner our goal is threefold first to understand the potential impacts of different types of risks second to protect investors assets and deliver high quality returns third Foster the common good by making smart and sustainable Investments Atlas is rolling out a new index that will help investors do two things first to invest into assets that are similar to those they invest today but in a new product and construct that provides a better risk reward profile second invest with purpose and invest for good invest in the health and wellness of a Nation to do this we devise what we call the three C's three pillars of a country's Prosperity credit Commodities communities credit is treasuries that have good ratings from agencies High liquidity and full faith and credits in international financial markets Commodities are gold that protects you against inflation and social political and geopolitical risks water and food that provide you personal security and what we call Green Metals copper red Earth Cobalt and such to redesign the electric grid and make it more sustainable the third sea is communities Farmland infrastructure commercial residential real estate that builds sustainable and resilient communities across North America [Music] we at Atlas believe in the concept of Beyond returns we of course want to hit our investment return goals but at the same time we'd like to improve the global economic system in a sustainable and holistic way we're not trying to reinvent the investment wheel here we want our clients to invest into assets that are similar to the one they do today using the same Financial intermediaries that they trust and in the economies that they are already exposed to today we believe that the atlas index provides them a better construct to do the same we're starting with an index that can be invested in using Total return swaps but we're also developing ETFs and digital assets that are security tokens backed by the underlying assets treasuries gold public rates real estate we're working with Goldman Sachs to design and launch our index and bring it to a broad investors base we're working with global Regulators to launch our products thoughtfully and carefully we're also working with large institutional investors that have a dual goal of achieving High Returns on investments but also investing for the long-term public good this is a very crucial time in history as there are major risks out there going to affect the world economy and the World At Large we cannot resolve these problems alone we have to resolve them collectively so our economic policies our investments have to be not just for the private return but also for the common good domestically and globally now is the time to come together now is the time to take action for our own individual sake and for the collective sake foreign [Music] it's really great pleasure and honor to be back to Abu Dhabi and 280 this city and this country is an island of stability social economic financial and political in a world that is increasingly risky dangerous volatile and unstable it is fair to say that we're living today in times of unprecedented unusual unexpected uncertainty for use I just published a book titled Mega threats 10 dangerous Trends in parallel future and how to survive them which are discussed serious major threats that imperil not only our economic and financial future economies the market but also threats to our planet and threats The World At Large and to humanity we're living in times in which policy mistakes have severe consequences even for counties like the United Kingdom and Russia the economic political and security consequences we've lived for the last 30 years in a period of great moderation where inflation was low growth was stable U.S and Global equities were rising and safe assets will also giving you positive returns as bond yields were falling and the price was going up the world of great moderation is over and we're entering now a new stage regime of what I call a great stagflationary and that crisis and instability a variety of negative aggregate supply shocks will reduce growth and increase inflation and together we lose monetary fiscal and credit policies they're going to lead not only to inflation not only to recession and therefore to stagflation but also to severe debt crisis as we have large stocks of private and public debts that are becoming unsustainable these are Global risks but even the United States where I live that is the strongest economy in the world is subject to this kind of pressures in the last decade we're very loose monetary fiscal and credit policies and a polarized political system so the role of the US dollar and U.S financial system is the stable anchor for the U.S and the global economy is at risk itself we have to think about designing a monetary system that is not just based on trust Fiat currencies but it's based on something more stable hard real and Financial if we want to be make sure that U.S and U.

S assets remain a destination for investors that will maintain the stability of the global economy in this world it is unstable and volatile where inflation is rising even traditional investment paradigms are breaking down are failing typical investment advice is 60 40 70 30 or even variants of it like respirity invest in a combination of risky assets like U.S and Global equity and safe assets like long-term U.S treasuries that model works because usually we have a negative correlation between equity prices and bond prices risk on risk of growth and recession but when inflation is not low and is rising you lose money on your equities as the discount factor for dividends is rising and U.S and Global Equity this year have fallen by 20 plus but you also lose money on the fixed income component of your portfolio because a rise in bond yield implies a fall Enterprise and this year for the first time in decades Bond and Equity prices have fallen at the same time and bond prices have fallen more than Equity prices so safe assets like treasuries have done worse than equities we have about 20 trillion dollar equivalent of fixed income assets that in the portfolio of Southern wealth funds private and public private and public Pension funds endowment Foundation family offices investor retail that are at risk this here that fixed income has lost 25 percent of its value there was nowhere to hide so you have to find alternative to provide you safety against the various risks we're facing right now what are these risks the risk of inflation stagflation the basement of Fiat currencies the damage coming from global climate change a geopolitical depression that's going to lead potentially even to hot war between great powers and social and political instability as the rise of income and wealth inequality economic males leads to a backlash against liberal democracy so what's the alternative for the last couple of years myself and my team in Atlas Capital team we've been working for alternative provide you safety and stability so I'm very excited today to announce the launching of the atlas Capital Benchmark index that is live today on Bloomberg and has been designed developed in collaboration with Goldman Sachs there are four elements to this indexes that I think are important first it's composition is a combination of treasuries and tips they provide your hedge against Rising inflation in the basement of Fiat currencies gold that provides an edge not only against inflation and financial crisis but also against social political and geopolitical instability and other Commodities are also reliable and finally sustainable real estate in the form of public reads sustainable because even in North America global climate change is going to lead to stranded assets in real estate commercial residential a combination of these assets provide you better returns secondly as we test this back tested this index over time we found it as well in good times and does even better on a risk-adjusted basis when there is volatile times of rising inflation third we believe that you shouldn't just maximize your returns of course you want to do that you do want to do well but you also want to do good in a world that is unstable way to invest in infrastructure in community in more resilient types of Investments so you want to do well and you want to do good and that's one of the aspects of what we want to do four with a product broad map we're starting with an index over which you can use it for doing total return swaps but the next year where they level up ETFs and digital assets that are backed by real and financial assets so these are security token backed by real information now what we're trying to do at Atlas is not just to derive a new Financial instrument that provides you a hedge against inflation against the basement of Fiat currencies and monitoring Financial instability with the Ambitions of thinking that we have to reform the domestic and international monetary system and design a new international store of value and a new potential Reserve currency there are four elements to our strategy first the idea of creating a monetary system domestic and international is not based only on Fiat is not a new idea and some of the recent attempts like developing cryptocurrencies and assets have been a miserable failure because they're not backed by anything their vaporware backed by nothing as opposed being backed by real assets and financial assets we believe that we can design a system that is better but this system has to have the following characteristics as to be stable and to be secure as to be transparent as to be scalable as to be non-speculative as to be adoptable it has to be backed by real and financial assets and has to be properly regulated and supervised with the appropriate amount of email and kyc that's what we're designing at Atlas secondly you need a private public partnership to develop a new international monetary system and we're working together private and public sector to ensure inputs adoption development and distribution of these assets we're working with software wealth funds with banks with Regulators with governments with other financial institutions to design develop these new international and financial monetary system third we need Collective responsibility for the common good as we live in a world in which there is fragility volatility and instability because of Economic and political and geopolitical risk of course we need to have a collective responsibility to develop financial instruments are more stable more secure and more viable however as the world also deals with human climate Social and Health crisis we also need to develop Investments that provide you return Beyond traditional returns they provide stability common good community and broader Collective benefits finally we think that solutions that are built with hard Assets in the partnership between the private and public sector have the strongest guardrails and the greatest likelihood for long-term success therefore we invite everybody private sector public sector in the US and abroad to work with us to resolve these problems final point we live in a world of severe and threatening Mega threats as I pointed out port at risk our economies our financial system the planet our own Global Security we're in keeping to kick the count down the road for the last few decades we put our head under the sun like oystery forgetting about the threats we're facing is time now to act and resolve collectively these Mega threats otherwise the world is going to be doomed and we're working together with all of you to achieve a better future for this country for this region and for the World At Large thank you very much for your attention [Applause]