The term uncorrelated asset classes covers a range of potential investments, including venture capital, real estate, private equity and commodities, but also alternative investment strategies.
But in today’s economy of collapsing government stock markets, default hedge funds and non-existent real estate performances, one company believes that investing in movies, including in cinemas, offers high-return alternative investments that can be used with tax breaks and multiple sources of revenue including cinema, DVD, video on demand, cable phone and overseas markets.
As an uncorrelated asset class, films and film finance outperform all uncorrelated asset classes in the world when looking at the more than $ 6 billion poured into film financing deals over the past 3 years, IRR across the spectrum for both studios and independent studios are sustainable worldwide. economic downturns in other industries.
When defense contractor Honeywell, New York Hedge Fund Elliot Associates and Dune Capital invested more than a billion dollars in total in several different film funds, numerous pension funds, private banks, hedge fund managers, private equity groups and high-value investors and family offices began to emulate their involvement in the film business.
Investors from Wall Street to Silicon Valley to the Middle East to Russia are sending money to Hollywood.
Anil Ambani, Larry Allison of Oracle, Paul Allen of Microsoft, Stephen Rails, Fred Smith of Federal Express, Norman Waite, co-founder of Gateway Computers, Jeff Schole of Ebay, Mark Turtle of the Money Store, Roger Marina of EMC Corp, Sidney Kimmel of the group clothes by Jones, Minnesota twin owner Bill Polad; Real estate developers Tom Rosenberg and Bob Jari, as well as financiers Sheikh Walid Al Ibrahim, Michelle Litvak and Philip Anschutz are behind the funding of a large number of films, ranging from box office hits to Oscar winners.
Institutional investors and hedge funds that invest in films include Elliot Associate, Stark, Columbus Nova, Bain, Honeywell and others.
Investors can use uncorrelated investment strategies to offset or offset the risk of a fall in the value of one or more investments in a traditional portfolio of stocks and bonds. To do this, investors typically place 5% to 20% of their total investment portfolio in alternative investments to protect the rest of the portfolio from the risk of falling.
Among the range of asset classes targeted at individuals, institutional investors, pension funds or private banks, alternative investments are becoming popular that offer greater diversification of investor portfolios. The benefits of such diversification have been demonstrated by Harry Max Markowitz (1990, Nobel Prize in Economics) in modern portfolio theory. He proved mathematically that an investor can reduce portfolio risks by simply keeping instruments that are not perfectly correlated – the correlation coefficient is not equal to one. By pursuing a diversified portfolio, investors should be able to reduce the risk of individual assets.
If investors in search of the alpha version are attracted by alternative investments, this is due to the fact that the allocation of funds to alternative investments provides advantages over traditional asset classes and portfolio diversification “EUR”, although with a certain level of risk.
As investors became more concerned about risk-adjusted returns, especially in a bear market environment, interest in alternative investment strategies gained momentum.
By investing in an alternative investment, a portfolio manager or a given investor seeks to achieve efficiency in the relationship between the securities. An uncorrelated asset class behaves independently of the other securities that make up the portfolio. Such investment funds allow investors to hedge the risk of falling asset value and avoid the effects of a snowball. One of the main benefits of alternative investment strategies is that they minimize the risk of falling.
By learning the proper structuring of film financing, which may also include tax breaks in the U.S. and international regions to minimize risk, many private bankers, sovereign wealth funds, big-capital investors, family offices and retirement plans realize that they are not gambling on one film in hopes of winning a film festival. If the company seeks to finance 10, 20, 40, 50, 75 films, the income from each of them increases not only but the final exit strategy in 5-7 years, which can bring 300-400% return on investment.
Movies, entertainment, the media and Hollywood in general seem to be thriving and not immune to economic problems. If you look at the theatrical receipts and DVD growth of recent films, including “Millionaire Adversity” or “Twilight,” which didn’t have movie stars, the profitability of these and many other films exceeds the profitability and profits of automakers, real estate, stocks, mutual funds etc. Primarily because a well-made film is not a local commodity that is simply bought and sold once, but a global one that has revenue potential in more than 50 countries, including theatrical, cable, television , satellite, airline, DVD and a huge explosion of video on demand.
While some outfits of private equity may contradict the view that Hollywood is safe, this country was built on blue chips and for retail investors, Wall Street and real estate were the way to go. Well, when retail investors as well as institutional investors move from laying bricks and mortar to the film business, the main factor is “why”? “
Some U.S. investors and C corporations are seeking either a rigorous 100 percent reduction in their investments under IRS Section 181, or simply being in a portfolio of investment opportunities that do not correlate. Foreign investors just want a high-yielding uncorrelated asset class that has a long-term appreciation, such as our hybrid film and 100% control over American cinema.
And for small retail investors, with the exception of wealthy families or investors with high net worth, the bridge between film financing, film production, rental and technology is approaching, so investors see that their investments bring immediate returns from monetizing government tax credits as part of the flow of equity, growth in a number of films versus investing in a single picture, possible benefits under Chapter 181, and participation in job creation and stimulating the economy, as each film production creates 50-100 jobs.