(News Bulletin 247) – Known for having warned very early on against the risks linked to the subprime crisis, Nouriel Roubini will launch an index fund this fall. This ETF will invest in different assets to withstand the crises that the world will, according to him, experience in the coming years.

Nouriel Roubini remains an incorrigible pessimist. To the point that the 66-year-old American-Turkish economist has been nicknamed “Dr. Doom” (“Dr. Apocalypse”) for his propensity to predict inglorious days for the stock market and the global economy.

The Harvard graduate became famous above all for having warned in 2006 about a subprime crisis, which was indeed at the origin of the collapse of the markets and the plunge of the global economy in 2008-2009. Even if it was especially after this crisis had become obvious to all that he denounced it.

After this feat of arms, the economist continued to deliver alarmist forecasts that were not, however, verified. For example, in 2011 he estimated that the peripheral countries of the eurozone would leave the monetary union within five years.

More recently, in 2022, Nouriel Roubini published his book “Mega threats” which brings together a series of dangers for humanity, such as climate change or “stagflation”, that is to say an economy that struggles to move forward while prices rise.

Investors who pay close attention to his worrying projections will now be able to bet on them on the stock market.

Launch planned for fall

According to a statement filed with the Securities and Exchange Commission (SEC) on July 30, Nouriel Roubini will be one of three managers of a future ETF (an index fund) that is due to be launched next October. This ETF will be called Atlas America Fund and will be launched by Atlas Capital Team, a company of which Nouriel Roubini is both the co-founder and chief economist.

According to the document filed with the SEC, this ETF will be actively managed and will aim to generate returns “stable in varied economic and financial conditions, while preserving capital.” To this end, this fund will invest in various assets, such as bonds, stocks but also listed real estate companies or gold.

“The fund’s investment strategy expresses the theme of economic resilience in a volatile global landscape characterized by soaring national debt, rising geopolitical tensions and changing environmental patterns,” explains Atlas Capital Team.

“It is based on the belief that the United States and its North American allies continue to offer attractive investment opportunities in this geoeconomic environment and that they embody the timeless American principles of self-reliance, innovation and adaptation, prudent management of resources and resilience in the face of adversity,” the company continued.

Climate migration and real estate

In short, this fund aims to identify investment opportunities in a world littered with threats, each more worrying than the last. And this with a defensive approach.

Nouriel Roubini himself explained it very well, in an interview with the Financial Times. The fund intends to build a portfolio composed of short-term Treasury bonds (up to two years), less exposed to rising inflation, as well as an “optimized basket of assets with low or negative correlation” (with the market as a whole) such as gold, listed “climate-resistant” real estate assets, Treasury securities protected against inflation and agricultural commodities, considered strategically important “when food supply is threatened by climate and geopolitical conflicts”, he detailed.

Nouriel Roubini gives a particular example related to climate migration. The economist estimates that with global warming, millions of people will leave Texas and Florida, which have become practically uninhabitable, to move to the northern United States.

This “mass migration to the north will have a significant impact on property prices,” he assures. Hence the need to target investments in real estate companies more exposed to this region.

The economist remains focused on the United States, simply because he is convinced that the country remains safer than others. “We are much safer than Europe and Asia. Thousands of miles of ocean separate us from our potential enemies and we are self-sufficient in food and resources,” he tells the Financial Times.

It remains to be seen whether this ETF co-piloted by the economist will be successful. Nouriel Roubini remains a “permabear”, or a market participant who is always pessimistic, while the American (and even global) stock markets have progressed significantly in recent years. The S&P 500 has almost doubled in five years.

“It should be remembered that [Roubini] “He was a ‘permabear’ during one of the greatest stock market booms in history. He’s not an oracle,” Kenneth Lamont, a fund analyst at Morningstar, told the Financial Times. But he appreciates that Roubini’s ETF is taking a defensive approach, which is currently rare.