In today’s complex and competitive investment environment, sovereign wealth and pension funds are being asked to look harder and farther to find higher yields. To meet this challenge, managers are leaving few stones unturned. Emerging markets, especially those in high-growth countries, are increasingly on the itinerary. Alternative investments, in the form of infrastructure, real estate, private equity, private debt and royalties, are becoming core to many allocation strategies. New structures such as funds, co-invests and directs are being explored. And partnerships are being formed with a wide variety of counterparties and participants.

As this new paradigm continues to take shape, a separate but parallel development is taking place in the international tax community. Governments around the world, eager to reduce deficit and debt after years of stimulus spending, are changing their behavior too. They are taking advantage of public sentiment on tax morality and turning to tax reform to ensure that companies (especially multinationals) pay their fair share of taxes into the depleted national coffers. At the same time, these cash-strapped governments are looking to the private sector to help fund and build much-needed capacity in areas such as infrastructure, health care, and social services.

The resulting investment landscape is not always familiar, nor always stable. Tax risks are very real and understanding, managing, and capitalizing on risks has never been more important. Governments and tax authorities, spurred by high-profile cases of tax avoidance, are rushing to reform.