Beyond Stocks and Bonds: Exploring Alternative Assets, e.g. private credit, VC, farmland, infrastructure w/ Kim Flynn, XA Investments

Economics Explored

Kim Flynn, President of XA Investments, discusses her 25-year career in asset management, focusing on alternative investments. She highlights the challenges faced during the 2008 financial crisis at Nuveen Investments, where she refinanced $15 billion in frozen auction rate securities. Flynn explains the structure and benefits of closed-end funds, particularly interval funds, which offer periodic liquidity. She details XA Investments' three SEC-registered closed-end funds with $900 million in assets, emphasizing private credit strategies with yields ranging from 9% to 15%. Flynn also explores the potential of alternative investments like farmland, infrastructure, and crypto, noting their role in portfolio diversification and income generation. Note: this episode contains general information only and is not financial or investment advice.

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About Kimberly Ann Flynn

Kimberly Ann Flynn is a President at XA Investments. She is a partner in the firm and responsible for all product and business development activities. Kim is responsible for the firm's proprietary fund platform and consulting practice. Kim has developed an expertise in closed-end fund product development and is a frequent contributor to media and industry events on topics including interval funds, alternative investments and London-listed investment companies. Kim has earned the CFA designation and is a member of the CFA Institute and CFA Society Chicago. She is also Series 7, 63 and 24 licensed.

Previously, Kim was Senior Vice President and Head of Product Development for Nuveen Investments' Global Structured Products Group. In her 11 years at Nuveen, she helped develop over 40 closed-end funds, raising approximately $13 billion in capital. In her leadership role at Nuveen, Kim was responsible for asset-raising activities through the development of new, traditional and alternative investment funds, including CEFs, ETFs, UITs and commodity pools.

Kim received her MBA degree from Harvard University, where she was a William J. Carey scholar and President of the HBS Volunteers. Before attending Harvard Business School, Kim spent three years working in Morgan Stanley's Investment Banking Division (1999-2002) in their Chicago office. She earned her BBA in Finance and Business Economics, summa cum laude, from the University of Notre Dame in 1999 where she was a valedictorian candidate, Rhodes Scholar finalist and the first recipient of the Paul F. Conway Award, given to a senior in the Department of Finance who embodies Notre Dame's tradition of excellence and who enriches the ideals of the university.

Kim was recently selected to serve on the Notre Dame Wall Street leadership committee. She also serves on the board of the Women in ETFs Chicago chapter as Head of the Mentorship Committee and on the advisory board of Youth Guidance's Becoming A Man program. She is an active member of the University Club of Chicago and the Harvard Club of New York City, where she conducts regular business. Kim and her family - husband, Leo; son, Teddy; and daughter, Rose - live in Lincoln Park.

Timestamps

• Introduction (0:00)
• Kim Flynn's Career Journey (3:09)
• Experience During the 2008 Financial Crisis (4:41)
• Development of New Financial Products Post-Crisis (7:17)
• Understanding Closed-End Funds and Interval Funds (8:48)
• Investment Strategies and Alternative Assets (21:01)
• Energy Investments and ESG Considerations (29:02)
• Gold, Crypto, and the Role of FinTech (31:36)
• Evaluating Asset Managers and Investment Strategies (35:03)
• Investment Outlook and Market Dynamics (47:07)

Takeaways

1. Alternative Investments Offer Diversification: Kim Flynn explains that alternative investments, including real estate, private credit, and farmland, provide diversification benefits, reducing reliance on traditional stocks and bonds.
2. Liquidity Management is Crucial: Interval funds allow limited liquidity for investors, making them suitable for illiquid asset classes like private equity and real estate.
3. Lessons from the 2008 Crisis: Kim shares her experience during the financial crisis, where she managed funds impacted by frozen liquidity, highlighting the importance of flexibility and innovation.
4. Private Credit and Farmland Are Popular: Kim notes that private credit and farmland investments have seen significant interest due to their yield potential and inflation protection.
5. Understanding Liquidity Premiums: Kim emphasizes that investors should seek a 300-400 basis point premium for illiquid investments compared to equivalent public market assets.

Links relevant to the conversation

Kim’s bio on the XA Investments website:

https://xainvestments.com/team/

US Treasury webpage on the Troubled Asset Relief Program (TARP):

https://home.treasury.gov/data/troubled-asset-relief-program

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Full transcripts are available a few days after the episode is first published at www.economicsexplored.com.