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?

 

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