We expect US venture capital down rounds will increase, even as artificial intelligence continues to serve as a major catalyst within the market. We believe flows to European turnaround and value strategies will increase and flows to China private investments will remain muted. We expect secondary transaction volume will increase to a record level.
We expect direct lending and European opportunistic private credit funds will outperform their long-term averages because of high asset yields and the pull back in credit availability among traditional lenders. We like structured credits, particularly high-quality collateralized loan obligation debt, and we expect high-yield bonds will outperform leveraged loans. But we remain neutral on high yield because spreads are compressed.
We expect equity long/short strategies will outperform their long-term average, due partly to the considerable rise in short rebates. This expectation is also linked to our view that global equity volatility will increase due to our economic expectation and ongoing geopolitical crises.
We expect REIT and public infrastructure performances will improve, given undemanding valuations and our view on interest rates. We believe private infrastructure funds will perform well, and we think nuclear energy will emerge as a small but important opportunity.
We expect the US dollar and gold will more or less hold their values, given our economic expectation and the many geopolitical risks. We believe the yen will appreciate, and we expect the thawing crypto winter will fully transition to a spring.
We expect more companies will set science-based targets to reduce their emissions and develop credible transition plans to meet their targets. We believe funds raised by natural capital strategies will hit a new record and that California carbon allowances will outperform global equities.
The College and University Flash Statistics Report provides a first look at the results of our 2023 College and University Investment Pool Returns survey. Included in the report are investment pool returns and asset allocation for 160 colleges and universities. Look for our full annual analysis in the upcoming College and University Investment Pool Returns report to be published later this winter.
No. In recent years, many private investment fund managers have painted themselves with a growth equity brush. Limited partners need to be increasingly diligent to determine if they are accessing the truly differentiated and attractive investment profile offered by actual growth equity.
Yes, US-China geopolitical realities are already having an impact on trade and investment flows within Asia. China will remain an important destination for investor capital, but the shift in capital flows, alongside positive domestic structural developments in other parts of Asia, create investment opportunities beyond China that deserve a closer look.
Many defined benefit (DB) plan sponsors have concerns that the longer-term lockups required for private investments (PI) preclude them from taking advantage of this asset class. However, an exemption exists that allows ERISA-governed DB plans to transfer their PI programs to a separate investment pool if they need to—without liquidating them or sacrificing returns.