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Investing in Alternatives Across Macroeconomic Regimes


In our white paper, we describe a framework that categorizes market environments of the last 22 years into major macroeconomic regimes—Recovery, Expansion, Slowdown, and Contraction. In doing so, we aim to help advisors identify historical return patterns across both traditional and alternative asset classes.

Download the white paper now.

What you'll learn

  • From Q4 2001 to Q4 2023, private markets asset classes had higher long-term average returns than US public equities—with tighter return spreads—across regimes. 

  • Private equity historically generated the highest average return compared to all other asset classes, likely bolstered by its performance during Recovery and Expansion regimes. 

  • Private debt funds performed best during Recovery regimes but also delivered an annualized return higher than its average when capital was deployed during periods of Contraction.

  • Recovery regimes were the best time to allocate to real estate, which outperformed other alternative asset classes on a forward return basis during these periods. 

  • Hedge funds performed their best in periods of dislocation, especially during Recovery, when they could generate alpha through differentiated opportunity sets. 

  • Unlike other asset classes, private infrastructure delivered positive returns during every regime type, including Contraction.

  • Understanding how an asset class has performed in the years following a specific regime is especially relevant for illiquid asset classes, given potential limitations on trading. Investing in illiquid asset classes may require a long-term, buy-and-hold approach.