Summary
It's time to enhance the asset allocation with commodities and real and alternative assets amid high uncertainty about growth and inflation.
Hedge funds (HF) to benefit from abundant alpha opportunities
The current macro backdrop sees moderate growth and evidence of continued disinflation, a conviction shared by Central Banks, which judge new rate hikes as improbable. With few tail risks clouding the short-term horizon, markets see a favourable asymmetry of risk that is boosting cyclical assets. Yet, macro uncertainty remains elevated amid data dependence, rate hesitations and a stretched cyclical rally. The economic cycle is also going through frequent inflections with uneven regional dynamics.
Private markets
Infrastructure favoured by the energy transition, private equity improving, private debt benefiting from high interest rates while real estate set to stabilise.
In the current environment of late-cycle economic growth and changing interest rate expectations, the private market and real estate asset classes offer relatively attractive investment opportunities as well as risk and return diversification.
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