26 April 2024
Alternatives Quarterly Views - Q2 2024
Market review Q4 2023*
During Q4 2023 traditional asset classes delivered very strong performance, with Global Equities up 11.0% and Global government bonds up 5.8%*. Consequently, the widely used 60/40 balanced portfolio gained 8.9% during Q4. The yield on 10- year German government bonds fell from 2.8% to 2.0%, while the yield on 10-year US Treasury government bonds fell from 4.6% to 3.9%.
Alternative investments also performed well, delivering strong total returns in Q4 as spreads tightened and credit default rates remained relatively low. Corporate distressed debt performed strongly (+4.3%), followed by Structured credit (+3.2%) and Corporate direct lending (+3.0%). Private Equity returned +1.5% during Q4. Real assets saw strong bifurcation between categories during Q4, with Private Infra performing strongly (+10.0%, on a marked-to-market basis), Private Farmland delivered +2.3%, while Core Private Real Estate continued to reprice (-2.1%).
Macro-economic outlook for 2024
The US economy remains robust, but we believe that the markets’ ‘no landing’ scenario is optimistic as consumers’ purchasing power is squeezed by sticky inflation and somewhat softer labor markets. In the Eurozone, broad leading indicators and hard data continue to point to further contraction, but there are some green shoots, particularly in peripheral Europe. Given the robustness of the US economy and inflation trends, Fed policy rate cuts are being pushed further into the future. Given the weaker economic outlook in Europe, the ECB is likely to deliver several rate cuts over the course of 2024. Meanwhile geopolitical tail risks continue to build, from Ukraine to the Middle East to the South Chinese Sea. As macro-economic uncertainty seems to fade somewhat and public markets have performed well, this could drive a stabilization in valuation expectations and discount rate assumptions, and subsequently improve transaction activity. Meanwhile, strong market performance has also eased the denominator effect.
* Global Equities: MSCI ACWI Net Total return USD index; Global government bonds: ICE BofA Global government bond index (W0G1, USD hedged). Alternatives’ indices are typically released with a one-quarter time lag due to their less liquid nature. Please see important disclaimers and disclosures at the end of this document. Past performance does not guarantee future returns; your capital is at risk.
Disclaimer
This publication of Van Lanschot Kempen Investment Management (VLK Investment Management) is distributed for information purposes only. The information in this document is incomplete without the verbal explanation given by an employee of VLK Investment Management. VLK Investment Management is licensed as a manager of various UCITS and AIFs and authorized to provide investment services, and, as such, is subject to supervision by the Netherlands Authority for Financial Markets. VLK Investment Management explicitly wants to prevent the benchmarks being used in this publication from being published or made available to the public within the meaning of the Benchmark regulation. Therefore, the benchmark data in this publication is made available to you, exclusively to internal business and non-commercial purposes.
This publication may at no time be viewed as an offer and you cannot derive any rights from this publication. Views expressed are those of the Investment Strategy & Research team at VLK Investment Management as of September 2023, are subject to change at any time. Any forward looking statements are not reliable indicators of future events, and no guarantee is given that such activities will occur as expected or at all. The external sources used to produce this publication were selected with great care and in good faith. We cannot guarantee that the information and data from these sources is up-to-date, correct and exhaustive. We accept no liability for printing and typing errors.
No part of this presentation may be redistributed or reproduced, in whole or in part, without prior permission from VLK Investment Management and VLK Investment Management accepts no liability whatsoever for the actions of third parties in this respect. We are not obliged to update or amend the contents in this publication. All investments involve risk, including possible loss of principal
This publication of Van Lanschot Kempen Investment Management (VLK Investment Management) is distributed for information purposes only. The information in this document is incomplete without the verbal explanation given by an employee of VLK Investment Management. VLK Investment Management is licensed as a manager of various UCITS and AIFs and authorized to provide investment services, and, as such, is subject to supervision by the Netherlands Authority for Financial Markets. VLK Investment Management explicitly wants to prevent the benchmarks being used in this publication from being published or made available to the public within the meaning of the Benchmark regulation. Therefore, the benchmark data in this publication is made available to you, exclusively to internal business and non-commercial purposes.
This publication may at no time be viewed as an offer and you cannot derive any rights from this publication. Views expressed are those of the Investment Strategy & Research team at VLK Investment Management as of September 2023, are subject to change at any time. Any forward looking statements are not reliable indicators of future events, and no guarantee is given that such activities will occur as expected or at all. The external sources used to produce this publication were selected with great care and in good faith. We cannot guarantee that the information and data from these sources is up-to-date, correct and exhaustive. We accept no liability for printing and typing errors.
No part of this presentation may be redistributed or reproduced, in whole or in part, without prior permission from VLK Investment Management and VLK Investment Management accepts no liability whatsoever for the actions of third parties in this respect. We are not obliged to update or amend the contents in this publication. All investments involve risk, including possible loss of principal
Es gibt einen Spruch auf Niederländisch, Kom verder, das viele Dinge bedeutet und unsere Geschäftsphilosophie darstellt. Er erfasst die Art und Weise, wie wir mit unseren Kunden arbeiten, aber auch wie wir unsere Beteiligungsunternehmen lenken, um Aktionärswert durch aktive Beteiligung zu schaffen.
Risikokapital. Der Wert von Anlagen und die daraus erzielten Erträge können sowohl steigen als auch fallen. Die Anleger erhalten möglicherweise nicht den ursprünglich investierten Betrag zurück. Die in der Vergangenheit erzielte Performance ist keine Garantie für die Zukunft.