Alternatives Quarterly Views

1 oktober 2023

Alternatives Quarterly Views - Q3 2023

The Q3 2023 edition of our Alternatives Quarterly Views is out!

For many years, traditional portfolios (equities, bonds) generally performed well, thanks to low inflation, declining interest rates, and negative correlation between equities and bonds. However, we believe that in the current regime of lower growth, elevated inflation and growing geopolitical uncertainty, portfolios need to incorporate alternatives with the aim to enhance portfolio returns, improve diversification, and embed sustainability. Alternative investments refer to a broad category of assets (e.g., Alternative credit, Real assets and Private equity) that extend beyond traditional investments.

In this quarterly publication we provide market insights across the following major alternative asset classes, emphasizing past quarter’s performance, current metrics and our 6-12 months’ outlook for each asset class:

Alternative credit	Real assets	Private equity
Corporate Direct Lending	Private Real Estate (equity)	Private equity
Structured Credit	Private Infrastructure (equity)
Distressed Debt	Private Farmland (equity)

In the current environment, within Alternative Credit, we have a moderately positive view on (mezzanine) Structured Credit and Distressed Debt, while we are cautious on Corporate Direct Lending given the economic cycle. Within Real Assets, we like the inflation-hedging characteristics of Private Infrastructure and Farmland but expect that Private Real Estate may continue to suffer from downward valuation revisions. Similarly, the current macro-economic environment, combined with elevated valuations, makes us cautious on Private Equity (particularly large buyout funds).

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Disclaimer

This publication of Van Lanschot Kempen Investment Management (VLK Investment Management) is distributed for information purposes only. The information in this document is incomplete without the verbal explanation given by an employee of VLK Investment Management. VLK Investment Management is licensed as a manager of various UCITS and AIFs and authorized to provide investment services, and, as such, is subject to supervision by the Netherlands Authority for Financial Markets. VLK Investment Management explicitly wants to prevent the benchmarks being used in this publication from being published or made available to the public within the meaning of the Benchmark regulation. Therefore, the benchmark data in this publication is made available to you, exclusively to internal business and non-commercial purposes.

This publication may at no time be viewed as an offer and you cannot derive any rights from this publication. Views expressed are those of the Investment Strategy & Research team at VLK Investment Management as of September 2023, are subject to change at any time. Any forward looking statements are not reliable indicators of future events, and no guarantee is given that such activities will occur as expected or at all. The external sources used to produce this publication were selected with great care and in good faith. We cannot guarantee that the information and data from these sources is up-to-date, correct and exhaustive. We accept no liability for printing and typing errors.

No part of this presentation may be redistributed or reproduced, in whole or in part, without prior permission from VLK Investment Management and VLK Investment Management accepts no liability whatsoever for the actions of third parties in this respect. We are not obliged to update or amend the contents in this publication. All investments involve risk, including possible loss of principal

There’s a saying in Dutch, Kom verder, it means many things and it’s our business philosophy. It captures the way we work with clients but also the way we steer our investee companies to deliver shareholder value through active engagement.

Capital at risk. The value of investments and the income from them can fall as well as rise, and investors may not get back the amount originally invested. Past performance provides no guarantee for the future.