Outlook 2022: Flying at a Lower Altitude
A compilation of our investment views for 2022.
Credit/Fixed Income
Government Bond Yields Are Likely to Rise as Central Banks Remove Support
Long-dated government bond yields rose in 2021 on strong economic growth and surging inflation. Central banks have maintained their easy money policies despite the rapid recovery in economic conditions, likely keeping yields lower than they would have been otherwise. This may soon change now that several major central banks are starting the process of dialing back support.
Expect Lackluster Returns on Most Liquid Credits
Low yields on many liquid credit assets curbed returns in 2021, a trend that seems likely to continue in 2022.
Look to Specialty Finance and Credit Opportunities Strategies for Diversification
Diversifying private credit strategies provide a good complement to portfolio mainstays. While we believe the economic outlook remains strong, it is not without risks. In direct lending, growing amounts of dry powder are pressuring deal structures and pricing. As a result, we anticipate that commitments to less-correlated private credit funds, such as those focused on life sciences, asset-based lending, and flexible credit strategies, will increase next year.
Market Matters: November 30, 2021
Risk assets sold off in November as pandemic-related developments introduced new uncertainties to the economic outlook.
The Investment Portfolio’s Swiss Army Knife: Adding Private Credit to Portfolios for US Investors
We view private credit as an underused and effective tool that can help a broad array of investors meet their objectives.
Market Matters: October 31, 2021
Global equities delivered their highest monthly gains this year in October, driven by US equities.
US Manager Universe Statistics: Third Quarter 2021
This publication presents manager performance for 37 asset classes and substrategies, showing the median, mean, and key percentiles of return. Relevant indexes for each asset class are also included to provide market context.
Has the Approaching Debt Default by Chinese Property Developer Evergrande Created Opportunities for Investors?
Yes. In recent weeks, several Chinese property developers have defaulted, and spreads on Chinese high-yield bonds have widened roughly 600 basis points (bps), taking their year-to-date loss to 18%.
VantagePoint: China – Reassessing Risks and Opportunities
As the second largest economy in the world, China remains an important destination for global investor capital. Yet, the pace and scope of China’s regulatory crackdown are causing concern. In this edition of VantagePoint, we review the nature of regulatory developments and their impact on the investment opportunity set. We believe that dedicated, strategic allocations to Chinese assets are still warranted. Investors should carefully consider their sector exposure and evaluate managers’ capabilities in the current regulatory and geopolitical environment.