All About Alpha
Past performance is not necessarily indicative of future results. No assurance can be given that any investment will achieve its given objectives or avoid losses. Unless apparent from context, all statements herein represent GCM Grosvenor’s opinion.
Select risks include: market risk, macroeconomic risk, manager risk, liquidity risk, interest rate risk, and operational risk.
Current Outlook: A Rocky Year-to-Date
While 2021 brought us record economic growth, storm clouds were already beginning to brew by the end of the year. It was clear that record GDP growth rates risked slowing as stimulus money from the COVID-19 crisis began to dissipate. Fiscal policy was becoming difficult to sustain, suggesting it was reaching its limits, and monetary policy began tightening. In fact, the beginning of 2022 has been a perfect storm of decades-high inflation, rising interest rates, geopolitical instability-turned-war, not to mention the persistence of the COVID-19 pandemic. These factors combined to generate extreme market volatility that persisted through much of the first quarter.
In our view, the combination and persistence of these factors means that investments reliant on beta are likely to continue to be very challenged. We therefore believe investors will need to seek alpha to drive returns and investing in alternatives can be a key source of such alpha. In the following, we highlight five areas within alternatives that we believe represent pockets of opportunity for alpha generation.
ConclusionCurrent and potential forthcoming market conditions can be considered challenging but, in our view, opportunities still exist to generate returns. The importance of properly sourcing, structuring, and executing investments is going to be more important than ever before, as is overall portfolio construction and diversification. We believe investing in the broader markets is going to be highly challenging over the foreseebale future, and therefore investors should focus on alternatives where opportunities for alpha generation exist.
With approximately $72 billion in assets under management, GCM Grosvenor is one of the world’s largest and most diversified independent alternative asset management firms. We have the resources, experience, and long-standing relationships with elite managers to evaluate and implement investments flexibly across our open architecture platform.
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We believe the current market environment supports the case for active management generally and prudent, less market-sensitive investment strategies implemented by hedged strategies. Here, we provide a brief overview of the year so far and explore where potential opportunities exist.
For illustrative and discussion purposes only. The information contained herein is based on information received from third parties. GCM Grosvenor has not independently verified third-party information and makes no representation or warranty as to its accuracy or completeness. The information and opinions expresses are as of the date set forth therein and may not be updated to reflect new information.