Contrarian Investor: Out of the shadows

CONTRARIAN

The term shadow banking conjures up images of mysterious financial types peddling dodgy-looking products and schemes to unsuspecting depositors/investors.

Yet I would maintain the fast-growing shadow banking world is one of the biggest opportunities for investors and their advisers over the next decade. This huge world of alternative financiers takes a number of different forms and guises, all linked together by two simple ideas. The first is that the big banks have had to withdraw from large parts of the credit spectrum, largely because their balance sheets have shrunk and the regulators are increasingly reluctant for them to lend anything deemed too ‘long term’ or ‘risky’ in nature. The second great positive driver is financial rep...