Convictions
Diversify with real and alternative assets
Unlock the potential of real and alternative assets to expand your investment opportunities
In the current late-cycle economic environment and amid evolving interest rate expectations, we believe that private markets and real estate could present attractive diversification* opportunities; indeed, the inclusion of non-traditional asset classes in a portfolio could help mitigate risks and smoothen out returns over the long-term.
In our view, infrastructure investments could benefit from stable pricing, reliable cash flow, and robust growth prospects driven by energy transition and decarbonisation efforts. Despite lower transaction volumes compared with the past, the sector remains resilient, with a critical role played by private funding.
Private equity transaction volumes have experienced a slowdown, with a decrease in deals activity and pricing, but numbers are set to improve. Current valuation multiples in listed markets, higher than at the start of the year, make private equity increasingly compelling.
For private debt, high interest rates and reduced bank lending have made this asset class more appealing, giving private debt managers higher bargaining power.
Real estate has been challenged by central banks’ policies and economic uncertainty, leading to a decline in capital values since mid-2022. However, prime properties in central business districts remain robust, due to strong demand and limited supply. Outside these areas, office rents are under pressure due to oversupply, though logistics and hotel sectors show better performance.
We expect some stabilisation in the market values of prime real estate in the latter half of the year, driven by a potential convergence of buyers’ and sellers’ price expectations. We also think that the integration of ESG consideration into investment analysis is important for investors.
In addition to their limited correlation with other asset classes, hedge funds could provide access to riskier assets at affordable risk, for example in high yield credit and emerging markets. We believe that long/short equity, EM fixed income and merger arbitrage strategies should be favoured for the second half of the year.
All in all, considering the potential of higher returns and the low correlation to public markets, we believe that alternative assets offer attractive opportunities for diversification of risks and returns.*
Our funds selection
Explore our investment expertise in real and alternative assets
Discover our Convictions themes
Bonds’ appeal with Central Banks at a turning point
Broaden the opportunity set in equities
Emerging market winners in a fragmented world
Dynamic asset allocation in a late cycle with inflation risk
Climate transition and structural themes
* Diversification does not guarantee a profit or protect against a loss.
Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 27 September 2024. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results.
Date of first use: 27 September 2024
Doc ID: 3895158
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