Gain insight into portfolio recommendations

Beyond simply providing a recap of recent history, our
quarterly reports provide our clients with insight into portfolio recommendations we make based on our perspectives on the risks and opportunities resulting from current market conditions. We have also included an update of our forward 7-year capital market assumptions with expected return for each asset class and sub-asset class.

– or click a specific topic on the right

Capital Markets

In 2023, capital markets flourished, with the ACWI Index and major equity indexes like the S&P 500 witnessing substantial gains, thanks to unexpectedly rapid inflation declines and bond yield reductions. The fixed income arena, including high-yield bonds and leveraged loans, benefited from a conducive rate environment and spread tightening, while private markets maintained resilience despite challenges. Looking forward, the strategy leans towards cautious optimism, prioritizing cash management and strategic investments in fixed income and private sectors to navigate the complex economic landscape.

Strategic Asset Allocation View

Navigating a shifting landscape

Our 7-year outlook anticipates moderate equity returns of 6.0%-7.0% annually amid declining interest rates and the transformative impacts of onshoring and AI, against a backdrop of US-China geopolitical tensions. While fixed income presents appealing risk-adjusted returns, especially in shorter maturities, private market strategies are expected to lead, offering a strategic pathway through the evolving economic and investment terrain.

Asset Class: Strategic Outlook


Fixed Income

Alternatives, Private Equity & Real Estate

Macroeconomic Conditions

The US economy surged in 2023, driven by consumer spending and policy support

Despite surge, the US is expected to slow in 2024, while Canada and Europe face economic headwinds, and China’s recovery falls short of expectations. With global inflation declining faster than anticipated, the focus shifts to potential central bank rate cuts, setting the stage for a nuanced economic landscape ahead.

Shorter-term View

Challenges of shifting inflation, economic growth, corporate earnings, geopolitical tensions, and the US Presidential Election

Heading into 2024, equity markets are poised at the intersection of declining inflation, potential rate cuts, and evolving economic and geopolitical dynamics, including the US Presidential Election. With AI’s impact on productivity and the tech sector’s performance under scrutiny, investors face a spectrum of scenarios from optimistic growth to cautious pessimism, suggesting a prudent approach to equity investments amid uncertain returns.

Equity Markets

Growth peaks & valuations concerns

In 2023, the MSCI ACWI Index surged 22.4%, driven by US tech giants and resulting in a 25.7% rise in the S&P 500, with uneven gains across global markets. High valuations in tech hint at a need for exceeding performance expectations, while sectors like healthcare and financials offer rebound potential.

Fixed Income Markets

Surging returns amid rate drops

Fixed income markets, spanning from government to high-yield bonds, enjoyed significant gains into 2024, fueled by sharp interest rate declines and a slowing economy. Notably, CCC-rated high-yield bonds outperformed with a 20.4% gain, as both categories benefited from lower rates and tighter spreads, underscoring a year of robust performance against a backdrop of economic and policy shifts.

Alternatives and Private Investments

Mixed outcomes amid economic shifts

The alternatives and private investments sector in 2023 saw varied performances, with the HFRX Hedge Fund Index and private equity funds posting gains, notably in convertible arbitrage and buyouts, despite a broader slowdown in deals and valuations. US private real estate faced mixed trends, from flat apartment rents and rising defaults in offices to strong industrial fundamentals, while venture capital experienced a slight decline in returns. This landscape underscored the sector’s nuanced opportunities and challenges amidst evolving economic conditions.


Short-term debt and private markets shine

In the investment arena, short-term US and Canadian government debt stands out, offering attractive yields of 4.0%-5.0%, with potential upsides in 10-year Treasuries for price growth. Private credit, especially senior direct lending, promises yields of 11%-12%, benefiting from a shift away from regional bank lending. Additionally, private equity, particularly in growth equity, is attracting attention due to better valuations and balanced growth-profitability dynamics, presenting diverse opportunities for investors in fixed income and equity.

Special Topic: Asset-based Lending

Asset-based lending, securing loans against tangible assets like inventory and receivables, caters to diverse borrowers for various purposes including acquisitions and growth, distinguishing itself by valuing collateral over financial performance. With a $30 trillion market spanning sectors from residential mortgages to commercial real estate, ABL provides essential liquidity, especially in times of financial distress, offering a collateral-based alternative to traditional cash-flow lending.