2023 Outlook
An overview of our 2023 views.
2023 Outlook
2023 Outlook: Real Assets
We expect energy equities will be resilient due to underinvestment in recent years. So, we don’t think investors should underweight this economic sector in the near term despite some long-term headwinds from decarbonization efforts. In real estate, we think offices may finally offer some attractive opportunities for the discerning investor.
2023 Outlook: Private Investments
We expect the cyclical backdrop to impact private equity and venture capital returns, ultimately influencing recently invested vintages the most. That said, we think the 2023 vintage could perform well.
2023 Outlook: Currencies
We expect the US dollar to remain firm but with limited appreciation relative to 2022, given our view that it is near the end of its incredible multi-year run. We believe gold’s performance will improve and digital assets, in general, will not surpass prior highs, many of which were set in 2021.
2023 Outlook: Hedge Funds
We expect macro hedge funds to perform well, given our expectations that market volatilities will remain elevated and our view that inflation risks are skewed to exceeding expectations. We expect long/short managers will benefit from positive short rebates.
2023 Outlook: Credits
We expect most liquid credits will generate higher returns in 2023 relative to 2022, given the better yields on offer. We also see private credit as offering opportunities, particularly in secondary trading.
2023 Outlook: Sustainability & Impact
We expect meaningful shifts in net zero and other sustainable and impact strategies toward more impactful implementation approaches. In line with this, we expect allocations to diverse managers to rise, as greater numbers of investors embrace stated investment policy objectives.
2023 Outlook: Equities
We expect global earnings growth will be below average next year, as prior interest rate hikes increasingly bite. With this backdrop, we expect value equities will outperform, Chinese equity underperformance will correct, and Healthcare may present an overweight opportunity.
2023 Outlook: Interest Rates
We expect interest rates will increase in many developed markets, as implied by market pricing. But we think the Fed will hold rates in restrictive territory for longer than expected. We don’t believe any increases will prompt another European sovereign debt crisis.
2023 Outlook: Portfolio Wide
We expect most investors should maintain equity allocations in line with policy targets. Consistent with this idea, we believe investors with portfolios that are more diversified across risk exposures will tend to fare better than investors holding more correlated investments.