May 25, 2020

Private equity is from Mars; hedge funds are from Venus

Paul Jackson. Global Head of Asset Allocation Research and András Vig. Multi Asset Strategist

What role can alternative assets play in our model asset allocation framework? We look at real estate, commodities, private equity, hedge funds, diamonds and fine wines.

We think some are core assets, others tactical while some have no role. We also examine how they have coped during 2020. There are few surprises in the year-to-date performance with "defensive" assets doing better than cyclical counterparts. The contrast between gold and broad commodities is striking. Private equity has fared worse than publicly-quoted counterparts (not surprising), while hedge funds have continued to behave like the poor relatives of government debt.

We suspect the performance so far during the second quarter may offer clues about the full recovery period (private equity is leading the way, while government debt is struggling). However, it is interesting that gold has continued to perform well, while REITS have lagged the recovery in equities.

For our more in-depth assessment click here.

Related insights: Are the stars aligning for EM equities?


Investment risks

  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested

Important information

  • Data as at 24.05.2020, unless otherwise stated. This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.

    Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals, they are subject to change without notice and are not to be construed as investment advice.