In an era of low global economic growth and ongoing deleveraging investors should target the fastest growing parts of the U.S. and global economy, says Glenn Hutchins, co-founder of private equity fund Silver Lake Partners.
“The operating assumption that most investors have is that [such an era] means accommodative monetary policy and low interest rates for a very long period of time,” Hutchins told CNBC's "Closing Bell".
Equity returns may also be low, and there’s little yield to be had in fixed-income securities, he noted.
Hutchins said that investors should invest in parts of the U.S. economy that are growing disproportionately like technology and energy. He also advises investing in parts of the global economy that are growing the fastest.
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Hutchins points to China and the Chinese technology sector in particular as being attractive.
Although China’s economy is slowing and there are concerns about the health of the state-owned enterprises and potential overinvestment in real estate and infrastructure, there are still opportunities to be had. “If you put that aside and look at what’s going on in China’s technology sector, it’s just roaring in terms of growth,” Hutchins said.
Hutchins said Silver Lake just made a large investment in Chinese Internet company Alibaba. What sets Alibaba apart is that it’s a commerce company like an Amazon.com or an eBay, he said.
“That’s extremely important in the Chinese economy where distribution systems and payment systems are not as developed as they are here,” he said.
With very low Internet penetration in China and very rapid growth in e-commerce, Hutchins said a dominant e-commerce company like Alibaba is “a terrific place to be regardless of whether China grows 6 percent or 10 percent.”