We have “cooled” on our outlook for real assets, given the slower-than-expected China “reopening” and a generally slowing global economy, combined with uncertainty over the future direction of the U.S. dollar.
Source: YCharts, 12-month data as of 6/2/23. You cannot invest in an index, and past performance does not guarantee future results.
Source: YCharts, 12-month data through 6/2/23. You cannot invest in an index, and past performance does not guarantee future results.
Historically, nontraditional, or alternative investment strategies have performed their best in a rising interest rate and volatility market regime. Volatility is “complacent” right now (i.e., lower than we believe it should be), and the direction of interest rates remains uncertain (though we believe they are headed higher over the medium term), but we continue to receive inbound calls from advisors regarding “what else” they might allocate to in these uncertain times.
Source: Wilshire, as of 3/31/23. You cannot invest in an index, and past performance does not guarantee future results. The Wilshire Liquid Alternative Index measures the collective performance of the five Wilshire Liquid Alternative strategies that make up the Wilshire Liquid Alternative Universe. The Index is designed to provide a broad measure of the liquid alternative market by combining the performance of the Equity Hedge, Global Macro, Relative Value, Multi-Strategy and Event Driven Indexes.
Summary: Current market conditions are not all that positive for real assets and alternatives. However, we are not convinced the market is correctly pricing in future movements in either interest rates or volatility.
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This material contains the opinions of the authors, which are subject to change, and should not be considered or interpreted as a recommendation to participate in any particular trading strategy, or deemed to be an offer or sale of any investment product, and it should not be relied on as such. There is no guarantee that any strategies discussed will work under all market conditions. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This material should not be relied upon as research or investment advice regarding any security in particular. The user of this information assumes the entire risk of any use made of the information provided herein.
Kevin Flanagan, Rick Harper, Jeremy Schwartz, Scott Welch and Jeff Weniger are registered representatives of Foreside Fund Services, LLC.
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