Market Outlook Q3 2018 - Late Stage Alternatives

Market Outlook Q2

As we enter the late stage of the current business cycle we take a closer look at which alternative investments perform well in this environment

Economic growth in the UK and in Europe is slowing down and with the dark cloud of Brexit uncertainty hanging over our heads, it seems unlikely that the UK economy will get any new stimulus soon. The US economy, on the other hand, is growing fast but signs of a cooling off appear on the radar screen for some indicators, such as the ISM business cycle indicators. Nevertheless, the US economy, currently in the second longest expansion  period ever, is likely to show strong growth in 2018 and 2019.

Because we expect the current environment of slowing economic growth without recession to continue for the next 12 to 24 months, it makes sense to investigate which asset classes can provide attractive returns in this environment. Given the high valuations in equity markets and the low yields of traditional fixed income investments, we will focus in this report predominantly on alternative investments.

Because the world of alternative investments has grown to be more than just hedge funds and private equity, there are always opportunities in this market segment – even in the late stages of a business cycle. This report tries to help investors in their search for what is not really a needle in a haystack, but turns out to be rather a tree in a forest – easy to find once you know where to look.

 

The UK business cycle

The UK business cycle 

Source: Bloomberg, Fidante Capital.

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