1、2023 OUTLOOK Published December 7,2022Introduction2022 has been a difficult year for investors.Equity and bond markets have experienced double-digit declines amid stubbornly high inflation,slowing economic growth,and the war in Ukraine.Recessions in the United States and euro area look increasingly

2、likely in 2023,while the United Kingdom appears to already be in recession and Chinas economy has stalled.Risk assets and bonds may still have some downside given these challenging conditions.Yet as we say good riddance to 2022,we recognize that at least this past year left us with better valuations

3、 that may eventually lead to good long-term returns.In periods of market stress,many investors may be best served by focusing on three core activities.First,investors should understand what they own and stress test portfolios to ensure adequate liquidity to meet liabilities,capital calls,and other o

4、bligations.Second,investors should consider opportunities to better diversify portfolios.2022 showed the importance of diversification beyond traditional equities and bonds.Many investments,including sovereign bonds,now offer reasonable return and diversification potentiala rare combination in recen

5、t years.Finally,investors should look for investment opportunities in markets that have seen significant stress.These markets may also provide opportunities to upgrade manager rosters.In the next pages,we highlight our expectations for 2023.While events will undoubtedly diverge from these expectatio

6、ns to some extent,we are sure of one reality.Thoughtful deci-sionsnot rash actionsduring chaotic environments are what separate top-performing investors from everyone else.OUTLOOK 2023AN OVERVIEW OF OUR 2023 VIEWSOur investment views are rooted in an expectation that the cyclical backdrop will remai

7、n challenging in 2023.We believe global economic growth will be weak,with risks skewed to missing the current consensus expectation of 2%.And,while we expect inflation rates will trend downwards in general across those developed countries that experienced pandemic-related surges,we suspect risks are

8、 skewed to either match or exceed current consensus expectations,which for the euro area and United States are 6%and 4%,respectively.PORTFOLIO WIDEWe expect most investors should maintain equity allocations in line with policy targets.Consistent with this idea,we believe investors with portfolios th

9、at are more diversified across risk exposures will tend to fare better than investors holding more correlated investments.SUSTAINABILITY&IMPACTWe expect meaningful shifts in net zero and other sustainable and impact strategies toward more impactful implementation approaches.In line with this,we expe

10、ct allocations to diverse managers to rise,as greater numbers of investors embrace stated investment policy objectives.INTEREST RATESWe expect interest rates will increase in many developed markets,as implied by market pricing.But we think the Fed will hold rates in restrictive territory for longer

11、than expected.We dont believe any increases will prompt another European sovereign debt crisis.EQUITIESWe expect global earnings growth will be below average next year,as prior interest rate hikes increasingly bite.With this backdrop,we expect value equities will outperform,Chinese equity underperfo

12、rmance will correct,and Healthcare may present an overweight opportunity.CREDITSWe expect most liquid credits will generate higher returns in 2023 relative to 2022,given the better yields on offer.We also see private credit as offering opportunities,particularly in secondary trading.PRIVATE INVESTME

13、NTSWe expect the cyclical backdrop to impact private equity and venture capital returns,ultimately influencing recently invested vintages the most.That said,we think the 2023 vintage could perform well.HEDGE FUNDSWe expect macro hedge funds to perform well,given our expectations that market volatili

14、ties will remain elevated and our view that inflation risks are skewed to exceeding expectations.We expect long/short managers will benefit from positive short rebates.REAL ASSETSWe expect energy equities will be resilient due to underinvestment in recent years.So,we dont think investors should unde

15、rweight this economic sector in the near term despite some long-term headwinds from decarbonization efforts.In real estate,we think offices may finally offer some attractive opportunities for the discerning investor.CURRENCIESWe expect the US dollar to remain firm but with limited appreciation relat

16、ive to 2022,given our view that it is near the end of its incredible multi-year run.We believe golds performance will improve and digital assets,in general,will not surpass prior highs,many of which were set in 2021.2OUTLOOK 2023Investors Following Rebalancing Plans Will Be Rewarded in 2023Kevin Ros

17、enbaum Global Head of Capital Markets ResearchWe expect economic growth will be below trend,and while inflation rates will trend lower across major developed markets,with the United States leading Europe,we think inflation rates will remain uncomfortably high relative to central bank targets in 2023

18、.This backdrop has typically been associated with elevated market volatilities and weak investment performances.Despite this reality,we dont think most investors will be well served by underweighting equity risk relative to policy portfolios.Attempting to time markets can easily lead to long-term un

19、derperformance.A key reason why we suggest sticking close to equity policy weights,rather than trying to time when you rebalance with when markets bottom,is the difficult nature of identifying equity market bottoms in real time.Consider March 2009,when equity markets bottomed during the Global Finan

20、cial CrisisUS real GDP was contracting 5%annualized,US monthly retail sales were contracting 13%versus the prior year,and newspapers were highlighting financial system risks.Neither that backdrop nor the backdrops of any other major equity market bottom offered compelling evidence that equity market

21、s were set to rally,meaning investors under-allocated to equities would not fully participate.Relatedly,when markets move violently in one direction,they tend to correct violently in the other direction.Looking back at the nine major global equity market downturns that have occurred since 1970,equit

22、y returns in the 12 months after the downturn ranged from 20%to 54%.These returns stand in stark contrast to the median one-year return across the 50-year period of 12%.Theory also supports this pattern.Collectively,investors suffer from behavioral biases,such as loss aversion,which tend to generate

23、 additional selling in down markets.This results in a disconnect between equity price levels and rational expectations,which eventually unwinds.So,investors that wrongly time rebalancing decisions during downturns may not fully participate in the rare chunky returns that tend to follow.But stepping

24、back,stressful situations also tend to impact decision-making processes negatively.The best way to mitigate this challenge is to stick with decision-making frameworks and plans.EQUITY MARKET RECOVERIES TEND TO DELIVER ABNORMAL RETURNSDecember 31,1970 March 31,2021 MSCI World Total Return Index 1-Yr

25、Returns Following Major Downturns(%)US DollarsSources:MSCI Inc.and Thomson Reuters Datastream.MSCI data provided as is without any express or implied warranties.29.925.037.520.224.524.923.752.454.0197071 197475 198283 198788 199091 199899 200304 200910 202021Median 1-Yr:12.33OUTLOOK 2023Portfolios W

26、ill Benefit from Diversification in 2023Thomas OMahony Investment Director,Capital Markets ResearchSubdued inflation,sustained growth,and relative peace provided a goldilocks envi-ronment for the balanced portfolio in recent decades.With concerns surrounding all three factors to various extents,tail

27、 risks for portfolios have not been as simultaneously elevated for some time.Therefore,thoughtful portfolio construction with regard to macro drivers and risk exposures should be a key concern in 2023.Inflation is slowing from its recent peak,but we doubt it will quickly settle at the low levels tha

28、t we have become accustomed.Though equities do a good job of outper-forming inflation over long horizons,their performance can be challenged over shorter horizons when inflation exceeds expectations.Allocations to inflation-linked bonds or gold can play a partial role in mitigating such inflation ex

29、posure,albeit with interest rate risk.Other complementary methods include real assets investments,which range from direct commodity exposure in the form of commodity futures,to investments in real estate,natural resources equities,and infrastructure.At the same time,the lagged impact of the highest

30、inflation rate in over 40 yearscombined with concerted global monetary tighteninghas the potential to drive a material slowing of growth and,subsequently,dampen inflation.Despite their recent subpar performance,US Treasuries remain best placed to thrive in the event of such an outcome,with the ten-y

31、ear yield at 3.68%.Alternative fund structures,such as hedge funds,present further diversification possi-bilities.For example,macro regime shifts have proven to be fruitful periods for global macro funds.Trend following strategies can also help to cushion portfolio returns during prolonged bear mark

32、ets,while allowing for participation in extended rallies.More esoteric strategies,inside and outside of the hedge fund umbrella,can also provide less correlated returns,such as the insurance-linked strategies discussed elsewhere.ASSET CLASS LEADERS VARY AS THE MACRO LANDSCAPE SHIFTS20052006200720082

33、00920000022Asset ClassBESTPEPECBEPEREEERERECEPEEPECCCommoditiesCEPEREPEEPEPEPEPEPEPEPERECEPEREReal EstateREREREHFCREBREREEHFEBBPEHFEHFHedge FundsEHFEPEHFCCHFHFHFEREREHFHFBREPEPrivate EquityHFBHFEBBHFBCBBBHFEBREHFEGlobal EquityWORSTBCBCREHFECBCCHFCCRECBBGlo

34、bal BondsSources:Bloomberg Index Services Limited,Cambridge Associates LLC,Hedge Fund Research,Inc.,MSCI Inc.,National Council of Real Estate Investment Fiduciaries,and Standard&Poors.MSCI data provided as is without any express or implied warranties.Over long horizons,more diversified portfolios ha

35、ve delivered higher returns with lower volatility than the classic balanced portfolio.The combination of diversi-fiers that is most suitable for a portfolio depends on an investors specific goals and circumstances.But as we move forward into 2023,likely a period of continued macro uncertainty,we bel

36、ieve it is prudent to build resiliency into portfolios by using the diversity of investment opportunities available.4OUTLOOK 2023Approaches to Climate&Net Zero Shift from Window Dressing to Real Change in 2023Simon Hallett Head of Climate StrategySince the 2015 Paris Agreement,global attention has i

37、ncreased on limiting the global temperature rise to 1.5 degrees Celsius by achieving“net-zero”greenhouse gas emissions by 2050.Glasgows COP26 climate conference triggered greater scrutiny of targets set by the increasing number of investors making net-zero commitments.This has focused attention on w

38、hat net zero should mean for an investment portfolio.At first,the common interpretation was to reduce“portfolio emissions”by selling high emission companies.This is called portfolio decarbonization.Since most emissions are concentrated among a small number of companies and sectors,it proved surprisi

39、ngly easy.But it led to accusations of window dressing and greenwashing.While selling high carbon companies does tend to increase those companies costs of capital,it made little difference in the emissions those companies contributed.The focus is now shifting toward driving“real world change”rather

40、than portfolio optics.The main lever is to encourage more portfolio companiesespecially the high emission onesto adopt“Paris-aligned”decarbonization plans with third-party veri-fication.This can be achieved through active ownershipvoting and engagement.It neednt imply portfolio changes,but it must h

41、ave genuine bite,with investors and their managers prepared to challenge and vote against company management if necessary.It can even be followed by passive investors,though the sanction of divestment adds teeth to any engagement.Private fund general partners can often directly drive better climate

42、performance than small public shareholders,as large or even controlling owners,so they should be held especially accountable.Voting and engagement works with established self-funding businesses that are hard to influence by public equity capital allocation.Elsewhere,credit strategies and private inv

43、estments are more likely to provide net new financing to business;in this case,capital allocation does matter since it could fund new climate positive or negative activity.As an extension of this idea,investors increasingly seek opportunities among climate solutionsbusinesses that are rapidly decarb

44、onizing or enabling others to do so.Source:CambridgeAssociatesLLC.EmissionIntensityLowHighFOSSILFUELPRODUCERSCARBONCONSUMERS/EMITTERS(MostoftheMarket)POSITIVESOLUTIONSEngageMainlyHereSeekforwardmomentumonclimatealignmentVC,growthcapital,andsustainablerealassetsprovidevaluablePrimaryCapitalHereManage

45、TransitionRiskBuyMoreofThesePRAGMATIC PROGRESS OVER TIME MUST BE DRIVEN BY ACTIVITY IN THE REAL WORLD AND NOT JUST REBALANCING5OUTLOOK 2023Sustainable and Impact Investors Will Prune the Weeds in 2023Chavon Sutton Senior Investment Director,Sustainable&Impact InvestingIf there was a season of abunda

46、nce in sustainable and impact investments(SII),it was the past three years.The letters“ESG”(environmental,social,and governance)became a calling cry,sprouting up on earnings calls in what appeared to be a seismic shift in companies wanting to approach business more sustainably.ESG and sustain-able e

47、xchange-traded fund inflows exploded,reflecting a heightened desire to use capital to right environmental and societal wrongs.The first net outflows since 2017 from the SII investment universe were seen in 2022,as investors began pruning the weeds in their portfolios.In other words,they trimmed sust

48、ainable investment alloca-tions that suffered relative underperformance or missed the mark on alignment with sustainability goals.*Cambridge Associates Social and Environmental Equity investing framework seeks to induce investment in SII themes through the application of a more systems-focused lens,

49、breaking down cognitive bias in investment processes and reclassifying investment managers with stronger alignment to investable social and environmental equity themes.US COMPANIES CITING ESG ON EARNINGS CALLS HAS INCREASEDFirst Quarter 2018 Third Quarter 2022Source:FactSet Research Systems.02040608

50、00Q12018Q22018Q32018Q42018Q12019Q22019Q32019Q42019Q12020Q22020Q32020Q42020Q12021Q22021Q32021Q42021Q12022Q22022Q32022Investors turned their backs against a swell of so-called green-,blue-,and social-washed productsdesigned to attract assets rather than achieving genuine social and financia

51、l returns.And Russias invasion of Ukraine exacerbated this trend by amplifying an already extraordinary run-up in energy prices that hampered the relative performance of sustainability funds that often exclude such companies.As risk assets struggle with elevated inflation and below-trend economic gr

52、owth,2023 will usher in a newmore cautious and demandingera of SII.A rebound in the pace of SII investing will be propelled by the application of more robust frameworks,*which refocus values,reframe risk,widen the investment opportunity set,and produce positive real-world outcomes.Global reporting a

53、nd measurement standards should continue to converge,giving investors greater clarity around how best to set,measure,and track ESG and impact metrics.Investors will be more discerning in their manager selection,seeking those with greater intentionality around sustainability and impact themes,traceab

54、le through lines between intent and execution in their portfolios,and a penchant for risk management.A turbulent year will compel rigor,which we think is the right kind of fertilizer for newly planted SII seeds.6OUTLOOK 2023US Federal Reserve Pauses,but Does Not Pivot in 2023Celia Dallas,Chief Inves

55、tment StrategistThe US Federal Reserve has sent clear signals that inflation is enemy number one and that defeating inflation requires further monetary policy tightening even if this results in recession.We see a pause in tightening as more likely than a pivot to easing in 2023 because inflation wil

56、l be slow to decelerate,causing the Fed to hold rates in restrictive territory*for longer than many other cycles.Inflation is starting to decelerate in some segments of the economy;however,“sticky inflation”sources(e.g.,housing,services)continue to accelerate.Wages are supported by persistent labor

57、market strength and will only ease as the economy softens.Unemployment remains near recent lows of 3.5%amid lower,but still robust,job growth.The number of job openings is down by more than 10%from its March peak,so the labor market is starting to soften,but it remains tight.*Restrictive territory r

58、efers to keeping policy rates above the neutral rate,or R*.R*is the equilibrium real rate of interest that balances between full capacity utilization of resources and low and stable inflation.R*can be estimated but is not an observable rate.With inflation decelerating slowly and labor markets showin

59、g resilience,the Fed will see little reason to pivot in 2023.At the end of November,the market is pricing in that the Fed will stop tightening in May 2023 with a terminal rate of 4.9%.This would imply an average degree of tightening based on tightening cycles since 1965 despite an above-average leve

60、l of inflation.Still,markets will be far less vulnerable to rising rate risk in 2023 given the degree of tightening priced into the market.PRICES ARE MIXED WITH SLOWER MOVING ITEMS(E.G.,RENTS)STILL INCREASINGSeptember 30,2012 October 31,2022 Year-Over-Year Percent Change(%)Sources:Federal Reserve Ba

61、nk of Atlanta and Thomson Reuters Datastream.-10-50500202022Flexible CPISticky CPIHeadline CPI7OUTLOOK 2023Developed Markets Government Bonds will Rebound in 2023TJ Scavone Investment Director,Capital Markets ResearchGlobal bonds are on pace to suffer their worst year on record

62、 in 2022,with the FTSE World Government Bond Index returning-18.1%through November 30 in USD terms.Unlike today,yields offered on government bonds were near their all-time lows heading into 2022,which left them vulnerable to the sharp rise in yields that occurred as central banks tightened policies.

63、Monetary policymakers have aggressively tightened policy in 2022 to bring down elevated inflation.Out of the 37 central banks tracked by the Bank for International Settlements,33 have raised policy rates so far in 2022,with the median central bank increasing rates by 275 basis points(bps).However,we

64、 expect most central banks to dial back(or pause)tightening efforts in 2023,which should support government bonds.There are several other reasons to suggest government bonds will perform better in 2023.For one,negative return years are rare.Ten-year US Treasuries have only experienced 11 negative re

65、turn years out of 63 since 1960,and only once experienced back-to-back years of negative performance,in 2021 and 2022.Second,2022s sell-off was extreme.For example,on a rolling 12-month basis,ten-year UK gilt yields at one point had increased as much as 307 bps this year,which is the 13th largest in

66、crease since 1901,and the benchmark suffered its third worst 12-month performance on record over this period.Lastly,at some point,we expect the market will see stronger demand from buyers looking to lock in higher yields,such as pension funds.Government bonds could continue to struggle if inflation

67、remains sticky and central banks tighten more than expected.However,investors are being fairly compensated for duration risk at current yields based on long-term trends in economic fundamentals.In the short term,growth is slowing,which should help limit any further rise in yields.If yields do oversh

68、oot,government bonds have less downside,as index yields have increased and duration has fallen,whereas if the aggressive tightening by global central banks does cause a recession next year,government bonds are better positioned to support portfolios.December 31,1969 November 30,2022 December 31,1969

69、=100Sources:Federal Reserve,Global Financial Data,Inc.,Intercontinental Exchange,Inc.,and Thomson Reuters Datastream.10-YR US TREASURY EXCESS RETURN VS CASH TYPICALLY BOTTOMS WHEN THE FED STOPS TIGHTENING0200400600800300400791320172021Fed Tighte

70、ning Cycles8OUTLOOK 2023Liquid Credit Markets Should Generate Higher Returns in 2023Wade OBrien Managing Director,Capital Markets ResearchFor many credit assets,2022 will likely go down as one of the worst on record,but the flipside of poor performance is higher yields,which will eventually generate

71、 higher returns.The path to these returns could be bumpy,however,and investors should plan accordingly.Current potential headwinds include higher interest rates than anticipated and decreased debt affordability.Many high-yield(HY)borrowers are prepared for a downturn,as gross leverage is nearly the

72、lowest in a decade and refinancing needs over the next 12 months are limited.More importantly,prices offer investors cushion for future stress.B-rated HY bonds trade around$0.88,and CCC-rated bonds trade around$0.76pricing last seen during the COVID-related depths of March 2020 and before that,early

73、 2016.So,while HY defaults will almost certainly rise from current depressed levels(1.5%on a trailing 12-month basis),even if they soar past current rating agency forecasts(around 3%to 4%over the next 12 months)and recoveries are in line with historical averages,inves-tors buying bonds at these pric

74、es could still see reasonable returns over a three-year period.Higher-quality credit investors should not ignore their own expanding opportunity set.Rising interest rates and credit spreads mean yields of assets such as AAA-related CLO debt(now over 6%)and US investment-grade corporate bonds(now ove

75、r 5%)have more than doubled over the course of 2022.Given extremely limited historical default rates,the main risk to investors is marking-to-market from higher base rates.European investment-grade buyers also should relish the opportunity.Investment-grade sterling corporate bonds now yield 5.5%than

76、ks to the recent LDI-driven volatility in the gilt market.This is more than sterling HY bonds were yielding as recently as February!Although we expect liquid credit performance will improve in 2023,investors should understand the markets are likely to be volatile and may get worse early in the year

77、before improving.The near closure of new issue markets in recent weeks is an ominous sign.Still,those willing to weather volatility are likely to see attractive returns,given todays depressed valuations.CREDIT YIELDS HAVE RETRACED HIGHER IN 2022As of November 30,2022Sources:Bloomberg Index Services

78、Limited,Credit Suisse,and J.P.Morgan Securities.8.637.7311.145.314.105.548.517.436.079.2314.048.90US HY Euro HYUS LLUS IGEuro IG GBP IG EM USD(Sov)EM USD(Corp)CLOAAACLOBBBCLOBBCMBSBBB12/31/20219OUTLOOK 2023Global Earnings Growth Will Be Below Average in 2023Corporate earnings proved resilient in 202

79、2,with nominal earnings expected to grow 10%and inflation to rise 8%globally.This resiliency came even as several central banks raised their policy rates by large margins to address broadening inflationary pressures.We believe this tightening will further weaken the global economy,which is already s

80、truggling with the consequences of the war in Ukraine and Chinas slowdown.As a result,we expect below-average earnings growth among companies in 2023.Earnings growth has averaged 10.4%across the last 20-year period.Sales growth contributed roughly half of that growth and is strongly linked to the di

81、rection of the economy.As it stands,global real GDP is expected to grow by 2%in 2023.We suspect the risks to that view are skewed to the downside,given the difficulty in knowing the impact of higher interest rates on economic activity in real time and our expectation that the Federal Reserve will no

82、t quickly pivot to cutting interest rates.More cyclical areas of the economy,which tend to be leading indicators of the broader economys direction,highlight our concern.For instance,Australian,Canadian,and US home prices have all started to contract,and key export bellwethersGermany and Koreahave se

83、en new order activity fall.Profit margin expansion has contributed the balance of earnings growth.Across the past two decades,margins increased from 4.6%to most recently 10.8%,which was a calendar-year high.Despite the large change in interest rates and current inflationary pressures,which impacts e

84、verything from wages to input prices,analysts expect margins to stay near record levels at 10.7%across full-year 2023.We suspect that expectation is optimistic.Margins typically come under pressure as economic growth weakens,and while we do think inflation will trend down next year with the United S

85、tates leading Europe,we believe it will remain uncomfortably above central bank targets and a challenge for companies to confront.While we believe corporate earnings growth will be below average,equity price levels have tended to bottom before earnings in past downturns.Ultimately,we think most inve

86、stors will be best served by sticking close to their policy equity allocation weight,as we detail elsewhere in this outlook.Kevin Rosenbaum Global Head of Capital Markets ResearchGLOBAL CORPORATE SALES GROWTH IS LINKED TO GLOBAL ECONOMIC GROWTH 20-Yr Period Ended 2021 Percent(%)Sources:I/B/E/S,MSCI

87、Inc.,Oxford Economics,and Thomson Reuters Datastream.MSCI data provided“as is”without any express or implied warranties.R=0.58-8-40481216-10-505101520Global Economic GrowthGlobal Sales Growth 10OUTLOOK 2023Developed Markets Value Stocks Should Outperform Broader Equities in 2023Sean Duffin Investmen

88、t Director,Capital Markets ResearchValue investors have not had much to cheer about since the end of the Global Financial Crisis.In fact,developed markets value stocks annual return was nearly 3 percentage points(ppts)lower than that of broader equities from 2010 through 2021.But value held up bette

89、r in 2022,besting the broader market by more than 10 ppts,even as vola-tility permeated financial markets.Surging real interest rates have taken a toll on growth-oriented equities,which tend to have longer equity duration.As liquidity continues to get drained from the market,more speculative equitie

90、s are likely to continue to feel pressure.High-flying technology companies have been hit particularly hard;the Goldman Sachs Non-Profitable Tech Index lost nearly 60%so far in 2022.Even after that decline,the index price still trades near pre-COVID levels,when financial conditions were much looser.W

91、hile the end of the rate hike cycle may be in sight,we believe values outperfor-mance will persist.Financials and energytwo sectors that are more heavily weighted in developed markets value indexeshave historically benefited from elevated real interest rates and inflation.History also suggests that

92、the recent leadership of growth-oriented sectors will not last,given value-oriented sectors have reclaimed market share from growth counterparts multiple times in the past 50 years as macro conditions changed.Even after richly valued technology stocks lost some of their froth in 2022,many still comm

93、and high valuations and could decline further.SECTOR DOMINANCE DOES NOT LASTJanuary 31,1973 November 30,2022 Global Equity Sector Weights(%)Source:Thomson Reuters Datastream.383200820132018Financials+EnergyTechnology+Consumer DiscretionaryMuch depends on the future p

94、ath of inflation as central banks are attempting to thread a needle to reduce price pressures while also avoiding a severe recession.An economic hard landing could create a challenging environment for value,which is heavily weighted in some more cyclically sensitive sectors.But favorable starting va

95、luations could help mitigate expected downside for value.Developed markets value trades at a normalized price-earnings multiple that is 0.68 that of broader equities,which ranks in just the 8th percentile of its history dating back to 1984.Thus,as we enter 2023,we favor equities that look better pos

96、itioned to hold their value in an environment of elevated real interest rates and have attractive valuations to boot.11OUTLOOK 2023The Euro Area Risks Stagflation in 2023We expect euro area inflation to remain high in an environment of constrained energy supply.At the same time,high energy prices,re

97、duced industrial production,and poten-tial energy rationing will hit economic growth,raising the risk of stagflation.Despite this outlook,relatively cheap euro area equity valuations reflect the outsized risk European equities are facing,and we remain neutral on the equity market.Nearly half of the

98、EUs gas and a quarter of its oil were sourced from Russia.In an effort to offset the elimination of Russian gasalong with the loss of hydro power and nuclear productionEuropean countries are importing gas from other sources to the degree that their infrastructure allows,building more liquified natur

99、al gas terminals to increase import capacity,accelerating renewables investments,and seeking to reduce consumption.These efforts have resulted in a high energy price tag that is pressuring inflation beyond just energy and food prices.Looking beyond this winter,Europe will need to source gas and refi

100、ll storage,likely without any Russian gas,putting continued pressure on gas prices and economic growth.Celia Dallas,Chief Investment StrategistEUROZONE INFLATION IS BROADENING OUTJanuary 31,2019 October 31,2022 Percent(Year-Over-Year)Sources:Eurostat and Thomson Reuters Datastream.-2024681012Jan-21A

101、pr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Non-Energy Industrial GoodsServicesFood,Alcohol,TobaccoEnergyEA HICPEA HICP-CoreSome corporations have cut back on production,and involuntary rationing may be necessary to get through the winter with limited energy supplies.Since March 2022,the consensus 2023

102、 real GDP growth forecast for the Eurozone has fallen 260 basis points to 0.1%.At the same time,Europes central banks are likely to maintain a tight-ening bias.Meanwhile,governments are engaged in large-scale fiscal interventions aimed at easing the pain of rising energy prices.These challenging con

103、ditions are priced into the market to some degree.On a normal-ized basis,the price-tocash earnings ratio of Europe ex UK equities is close to its median historical level,compared to US and other developed equities that continue to trade at a considerable premium.Further,the euro has been the primary

104、 relief valve for stress in the euro area,falling 14%versus the US dollar over the first three quarters.12OUTLOOK 2023A European Sovereign Debt Crisis Will Not Occur in 2023European policymakers face a difficult challenge as the energy shock has increased the risk of stagflation,as we detail elsewhe

105、re in this outlook.The resulting mix of tight monetary and loose fiscal policies has heightened concerns about debt sustainability and put upward pressure on euro area(EA)government bond yields.However,while ten-year Italian government bond yields,for example,are the highest theyve been since the 20

106、0912 European Sovereign Debt Crisis,unlike previous“debt scares,”the rise in yields in 2022 has been driven by higher core EA country yields.The spread between ten-year Italian-German yields,while elevated,remains below its 2018 high and well below the heights reached in 2011.EA periphery yields may

107、 move higher as the European Central Bank(ECB)continues to tighten,or if the economic outlook deteriorates.But we do not expect spreads to blow out as they did in 201112.Italy likely represents the biggest risk to this view.With a debt-to-GDP ratio of 150%,Italy is one of the most indebted EA countr

108、ies.The combination of higher borrowing costs,looser fiscal spending,and weaker growth threatens to further strain Italys fiscal position.Further complicating matters is the far-right coalitions recent election victory.However,high inflation and the low average cost and longer average maturity of ou

109、tstanding Italian debt should mitigate the impact of higher borrowing costs and increased fiscal deficits.Italy also has less incentive to take a hardline stance toward the EU,as it did in 2018,given stronger support for the EU within Italy and the fact that Italy has grown increasingly dependent on

110、 the bloc.Quantitative tightening is also a risk,but the ECB is incentivized to prevent a periphery spread widening,as it would reduce its ability to address inflation via tightening.As such,it has added tools(e.g.,flexible pandemic emergency purchase programme rein-vestments and the Transmission Pr

111、otection Instrument)to strengthen the credibility of its backstop.If there was a large move in Italian-German spreads above their 2018 highs,we would likely view it as a buying opportunity.TJ Scavone Investment Director,Capital Markets ResearchJanuary 31,2008 November 30,2022 Percent(%)Sources:Euro

112、Area Business Cycle Network and Global Financial Data,Inc.CORE EURO AREA GOVERNMENT BOND YIELDS HAVE DRIVEN THE RISE IN PERIPHERY COUNTRY YIELDS1.943.871.93-008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Euro Area Business Cycle Network-defined Recessions10-Yr Ge

113、rman Yield10-Yr Italian Yield10-Yr Italian-German Yield Spread13OUTLOOK 2023Chinese Equities Should Outperform Global Equities in 2023Aaron Costello Regional Head for AsiaThe Chinese economy and equity markets have been pummeled over the past two years due to self-inflicted policy actions,starting w

114、ith the regulatory crackdown on the technology sector,a tightening of credit to the real estate sector,and the ongoing zero-COVID policy.From its peak in February 2021,the MSCI China All Shares Index declined more than 40%through the end of November,underperforming global equities by a wide margin.W

115、ith Xi Jinping further consolidating power and giving no clear signal of a change in policies,investors have capitulated on any near-term recovery in the Chinese economy and dumped Chinese equities following the Party Congress in October.Yet,amid the investor gloom,China will likely surprise to the

116、upside in 2023,both by unveiling new pro-growth policies and by moving away from the zero-COVID policy sooner than expected.The Politburo meetings and Central Economic Work Conference held in December will give more clarity on economic policy and spending plans,while rumors of a change in the zero-C

117、OVID policy propelled Chinese equities higher in early November.Although the official stance remains that zero-COVID is the appropriate policy for China,a subtle shift in government rhetoric seems to be underway,particularly regarding the viruss lethality and local governments lockdown procedures.Ou

118、r view is that small policy tweaks will set the stage for a larger shift,given the negative economic impact of current policies.However,meaningful policy change may not occur until after first quarter 2023,given the required tilt in government rhetoric,and because major policies are formally approve

119、d and adopted at the National Peoples Congress in March.There may also be a desire to wait until any winter surge in global COVID-19 cases passes.Thus,while we shouldnt expect China to abandon its zero-COVID policy in the near-term,investors should watch what the government does,rather than what it

120、says.Given depressed valuations and high skepticism,Chinese equities face a low bar heading into 2023.EASING OF LOCKDOWNS SHOULD SEE CHINESE EQUITIES OUTPERFORMDecember 31,2021 November 30,2022Sources:Goldman Sachs Global Investment Research,MSCI Inc.,and Thomson Reuters Datastream.MSCI data provide

121、d as is without any express or implied warranties.008090100110Dec-21Feb-22Apr-22Jun-22Aug-22Oct-22China All Shares vs ACWIDecember 31,2021=100(LHS)GS China Lockdown Index7-Day Moving Avg(RHS,inverted)14OUTLOOK 2023EM ex China Equity Performance Will Be Unremarkable in 2023Stuart Brown Inv

122、estment Director,Capital Markets ResearchEmerging markets(EM)excluding China equities are on track to underperform developed markets(DM)in 2022 in USD terms.While elevated external pressures and a late business cycle environment temper our enthusiasm for EM ex China in 2023,this backdrop has largely

123、 been priced in by markets.The balanced outlook suggests performance could be unremarkable,and we think investors should hold EM ex China allocations in line with their policy.A continuation of dollar strength and restrictive Federal Reserve policy will weigh on EM ex China equities.In 2022,our EM e

124、xternal vulnerability gauge fell to its weakest level in 20 years,and capital outflows intensified.EM countries drew down foreign exchange reserves to shore up depreciating currencies and cover rising import bills,which adversely impacted current account balances.Although we expect the Fed will even

125、tually pause its rate hiking cycle next year,EM stocks have typically underper-formed DM peers in the six and 12 months following the Feds final rate hike.Slowing economic activity poses another headwind.EM tends to lag DM during the latter stages of the business cycle.Weak economic activity will st

126、ifle export activity,with the World Trade Organization now expecting trade volume growth of just 1%in 2023.Resource-exporting EMs may be insulated if commodity prices remain elevated,but tech-heavy Asia faces the risk of waning semiconductor demand and heightened geopolitical tensions surrounding th

127、e sector.Still,these dynamics are already baked into markets.Analysts expect EM earnings growth will lag DM in 2023,even after EM earnings growth was downgraded by a larger degree than DM so far in 2022.And EM valuations are low by virtually any measure.The markets low expectations for EM limit the

128、potential for excessive perfor-mance downside.EM ex China will likely rally when China ultimately relaxes its zero-COVID policy.Although a major policy shift by China may support EM equity performance,we suspect it may also benefit DM shares.In other words,we doubt EM ex China performance will meani

129、ngfully diverge from DM equities when China abandons its zero-COVID policy.EM EARNINGS EXPECTATIONS AND VALUATIONS ARE LOWAs of November 30,2022Sources:I/B/E/S,MSCI Inc.,and Thomson Reuters Datastream.MSCI data provided as is without any express or implied warranties.2.73.59.98.6EM EPSDM EPS2023 Gro

130、wth Expectations(%)8.414.310.518.0EM CAPCEDM CAPCEValuation LevelsCurrentAs of 12/31/202115OUTLOOK 2023An Attractive Healthcare Equity Entry Point Lurks in 2023US healthcare stocks were a mixed bag in 2022.Large and mid caps declined but proved defensive amid the broader equity market drawdown.Small

131、 caps fared decid-edly worse,especially in the biotech and life sciences industries.Performance may again be difficult next year,as the earnings outlook appears weak and economic chal-lenges seem poised to persist.We expect this may present an attractive opportunity to overweight the sector,given it

132、s appealing long-term prospects.Earnings are expected to decline next year,which would be the only earnings contrac-tion on record based on available data beginning in 1993.There are two primary reasons for the diminished outlook.First,the one-time impact from COVID-19 is set to fade after the secto

133、r reported record profit growth in 2021.Second,inflation will bite in 2023.Since healthcare inflation tends to lag overall economy-wide inflation,it only started catching up to broader inflation in the second half of 2022 and looks set to continue accelerating.This may impact spending by way of redu

134、ced insurance benefits and higher out-of-pocket costs for consumers.At the same time,the industry faces headwinds from labor shortages and rising input costs.The macro environment will likely also weigh on the sector,particularly smaller compa-nies.These entities tend to have little to no current ea

135、rnings,with the lions share of their value based on future growth.This makes them highly sensitive to elevated inflation and interest rate changes.Merger&acquisition activitya key driver of performanceis also likely to remain weak,given the higher cost of capital environment.There may be an opportun

136、ity to overweight the sector next year.An attractive entry point might emerge if performance meaningfully lags broader equities,valuations derate,and the earnings outlook rebounds.We also like the sectors longer-term prospects,given its compelling secular trends.These include the large demographic s

137、hifts in many developed countries,convergence of healthcare and technology,and innovation in drug development,among others,all of which have the potential to drive earnings and outperformance.Given the highly specialized nature of the industry,we suggest implementing allocations through active manag

138、ement.Stuart Brown Investment Director,Capital Markets ResearchANALYSTS EXPECT S&P 500 HEALTHCARE EARNINGS TO CONTRACT NEXT YEAR200323 Calendar Year Earnings Growth(%)Sources:I/B/E/S,Standard&Poors,and Thomson Reuters Datastream.-505003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20

139、14 2015 2016 2017 2018 2019 2020 2021 2022 2023FORECASTS16OUTLOOK 2023Energy Equities at Benchmark Weights Will Benefit Investors in 2023Wade OBrien Managing Director,Capital Markets ResearchEnergy equities have massively outperformed in 2022,with the MSCI World Energy Index beating the broader MSCI

140、 World Index by around 70 percentage points through the end of November.Energy sector profits have rebounded as underlying commodity prices were boosted by the tragic events in Ukraine and related supply disruptions.Given this strong performance,investors may be tempted to underweight the sector,ass

141、uming weak growth or the long-term decarbonization and net-zero efforts of the global economy will trigger underperformance.But,in the short-term,we recommend benchmark weights,as energy equities remain inexpensively priced and could again surprise in 2023 under several scenarios.Depressed valuation

142、s suggest energy equities are almost universally unloved,despite rebounding profits and strengthening balance sheets.Forward earnings multiples for European and US energy stocks of 5.5x and 9.8x,respectively,are both in the bottom decile of historical observations.Volatile earnings are a considerati

143、on and sector earnings are expected to decline 11%next year(versus a 4%increase for the broad index).Risks are likely skewed to the downside if a recession occurs.Still,there is a more constructive case for energy equities.The sector has been disci-plined with capex in recent years and instead paid

144、down debt,reducing the likelihood of a supply gut if global growth continues to slow.Energy companies also should continue to generate robust,if slightly reduced,free cash flow,offering ample cushion for dividends and buybacks.Even with reduced earnings in 2023,large US energy companies will generat

145、e enough cash flow to cover their expected dividend more than three times.Finally,there is a sad possibility that the war in Ukraine will escalate,likely putting a floor under commodity prices even amid a global slowdown.Many questions hang over energy equities heading into 2023.The slowly unfolding

146、 energy transition presents both a long-term threat and competing opportunity set,which investors should also be pursuing.However,with valuations depressed and cash flow generation high,investors should maintain neutral positions to public energy companies in the near term.Those doing so should cons

147、ider active managers that are engaged with corporate management teams and working to accelerate the transition to a low carbon economy.ENERGY COMPANIES ARE WELL PLACED TO BOOST SHAREHOLDER RETURNS IN 2023201222 US Dollar(Billions)Sources:FactSet Research Systems and MSCI Inc.MSCI data provided as is

148、 without any express or implied warranties.287 277 269 149 114 155 202 167 74 203 194 0020000212022CAPEXDividends+BuybacksEBITDA*Data for 2022 are through third quarter.*17OUTLOOK 2023Returns of Insurance-Linked Securities Will Improve,Benefiting From Bett

149、er Pricing in 2023Christine Farquhar Global Co-Head of Credit Investment GroupInsurance-linked securities(ILS)provide a capital markets alternative to traditional reinsurance.Investors receive interest(insurance premiums)and repayment of prin-cipal,net of any claims.Over the last 15 years,these asse

150、ts have been weakly correlated with equities and bonds.Yields rose through 2022,in response to regulatory pressures and a lack of underwriting discipline in Florida.We expect this back-up in yields will translate into great performance next year.Pricing on industry-loss warranties,*which allow inves

151、tors to trade insurance risk on the basis of parametric industry loss triggers,has been offering yields not seen in more than a decade.ILS strategies can be complex,as portfolios need to be carefully constructed to limit the tail risk from major events.A combination of liquid catastrophe bonds(CAT b

152、onds)and collateralized reinsurance contracts is best placed to deliver optimal reward for well-managed risk.Experienced managers with transparent track records and limited conflicts with parent company balance sheets are best positioned.The standard bench-mark is the Swiss Re Cat Bond Index,reflect

153、ing the more liquid end of the$97 billion ILS market(as of June 2022),but it is not directly investable.We believe the yields on offer provide a good return opportunity relative to risk next year,but investors clearly need to review the asset class on a regular basis,as it back-stops property agains

154、t the risks of climate change and global warming.More frequent weather events and more severe loss outcomes have already put upward pressure on yields to compensate investors.Managers are factoring these developments(along with increased general claims inflation)into security selection.They are more

155、 careful selecting insurance counterparties in Florida and limiting exposure to aggregate contracts,which are more exposed to higher frequency events such as wildfires,hail-storms,and tornadoes.Explicit meteorological modelling and disciplined underwriting of insured risk increase our confidence in

156、manager selection.Man-made risks,such as cyber,shipping,and aviation losses,are generally not as well rewarded for less transparent risk.In short,2023 represents a market dislocation and opportunity to invest in a diversifying asset on attractive historic yields.Joseph Tolen Investment Director,Cred

157、it Investments*An industry loss-warranty is a reinsurance contract that pays out when the financial losses experienced exceed a specified threshold.INDUSTRY-LOSS WARRANTY PRICING IS NOW MORE CONSERVATIVEFirst Quarter 2005 Third Quarter 2022 Percent(%)$50B Industry Loss Attachments ThresholdSource:Ar

158、temis.bm.02005200720092001720192021US WindUS All Natural Perils18OUTLOOK 2023Positive Short Rebates Will Help Long/Short Equity Performance Improve in 2023Eric Costa Global Head of Hedge FundsWe expect the short rebate available to long/short managers will remain positive next

159、year,given our view that the Federal Reserve will not pivot to cutting interest rates.This rebate,which short sellers receive when they borrow stock,has ranged between-50 basis points(bps)and 0 bps for much of the last 15 years.The recent shift of the short rebate into positive territory removes a c

160、lear hurdle for long/short equity funds,and we expect it will help performances in this space improve next year.In addition to the short rebate,the return components of long/short equity strategies include the long alpha,short alpha,beta,and fees.Skilled long/short equity managers typically generate

161、 long alpha on a consistent basis over time.Generating short alpha is challenging and often lumpy,while creating absolute dollar profits from the short portfolio is even more difficult.In fact,absolute short profits have been essentially non-existent since the Global Financial Crisis.A large,short r

162、ebate acts as a return floor,reduces performance volatility,and helps to cover management fees.Simply put,the short rebate is the current Fed funds rate minus a spread(typically 25 bps to 50 bps)multiplied by the total gross short exposure of the manager.Long/short equity managers with robust short

163、portfolios of individual equities will benefit more than managers with small,short portfolios.This being said,the short rebate should not drive investment decisions.The ability to generate long and short alpha remains most critical.While directional,growth-oriented long/short equity managers benefit

164、ed the most from the zero interest rate policy and quantitative easing regimes,the current economic environment should result in more obvious winners and losers as companies must now compete for capital.High-quality businesses should trade at a premium,while low-quality,cash-burning businesses shoul

165、d trade at a discount.Dispersion within equity markets is increasing as is volatility.This is an excellent backdrop for alpha creation on longs and shorts as long/short strategies tend to do well relative to equities during periods of heightened volatility.Stephen Mancini Senior Investment Director,

166、Hedge Fund ResearchSHORT REBATE HAS RETURNED TO POSITIVE TERRITORYJanuary 31,1990 November 30,2022 Percent(%)Sources:Federal Reserve,National Bureau of Economic Research,and Thomson Reuters Datastream.0200400600872000200220052008200182021NBER-defined US Recessi

167、ons19OUTLOOK 2023Continued Inflation Uncertainties Underpin Our Optimism in Macro Hedge Funds in 2023Meisan Lim Managing Director,Hedge Fund ResearchMore than at any time in recent history,both equities and bonds have been very sensitive to macro events,particularly to inflation prints.During period

168、s of large positive US infla-tion surprises,macro hedge funds have tended to do better than a typical 60/40 portfolio.Conversely,when inflation has surprised materially to the downside,these managers have underperformed 60/40,though still managed to generate positive returns.After the high inflation

169、 experienced in 2022,is the case for macro hedge funds still intact?We believe so.First,we suspect risks are skewed to either matching or exceeding current inflation expectations in 2023,which for the United States and euro area are 4%and 6%,respectively,according to Bloomberg.As a group,macro funds

170、 have a wide range of resources to identify mispricing and can choose from a variety of instruments to maximize their payout.Other tailwinds support our thesis that macro strategy will do well in an environment susceptible to inflation surprises.Rather than focusing on promoting maximum employment a

171、s it did in the low-inflation era,the Federal Reserve is now forced to favor combating inflation by raising the Fed funds rate.The market is pricing in that the Fed will stop tightening in May 2023 with a terminal rate of 4.9%,and,as written else-where,we believe a pause in tightening after May is m

172、ore likely than a pivot to easing policy rates.This will impact discount rates,making stocks and bonds vulnerable,and provide good short-selling opportunities for macro managers.Furthermore,when quantitative easing flushed the markets with liquidity and drove investors to reach for yields higher up

173、the risk curve,concentrated beta-driven port-folios were more attractive than a diversified portfolio with many alpha sources.Now that monetary tightening is in effect and interest rates have risen,macro managers are in an opportune position to benefit from greater alpha opportunities and diversific

174、ation of assets and geographies.With loose monetary conditions and unusually low inflation in the rear-view mirror,macro funds that are uncorrelated to traditional portfolios of stocks and bonds will prove useful diversifiers.First Quarter 1999 Third Quarter 2022 Percent(%)Sources:Bloomberg Index Se

175、rvices Limited,Citigroup,Hedge Fund Research,Inc.,MSCI Inc.,and Thomson Reuters Datastream.MSCI data provided as is without any express or implied warranties.MACRO HEDGE FUNDS TEND TO DO BETTER THAN 60/40 IN LARGE POSITIVE INFLATION SURPRISES 7.34.66.43.2-0.65.112.44.3-5051015Large Positive Surprise

176、sModestly Positive toModestly NegativeSurprisesNegative SurprisesLarge Negative SurprisesHFRI Macro Total60/40 Portfolio20OUTLOOK 2023Credit Opportunity Strategies Should Deliver Above-Average Returns in 2023Vijay Padmanabhan Managing Director,Credit InvestmentsWe believe that the macro environment

177、will continue to cause stress in the economy and create an attractive investment environment across a number of strategies.Primary market yields are attractive due to increased rates and credit spreads.Secondary trading opportunities are attractive,as supply chain issues and inflation are pressuring

178、 margins,creating the opportunity to buy the securities of good companies at discounted prices.While the opportunity is global,Europe is particularly attractive due to the geopolitical headwinds.As a result,we expect returns of private credit opportunity strategies to be above their long-term averag

179、e of 10%in 2023.Shortly after the war in Ukraine began,European banks pulled away from lending and the public broadly syndicated loan and high-yield markets largely shut down.As a result,private credit managers have become the main liquidity providers,which has allowed them to demand good terms and

180、pricing.Banks are saddled with underwritten deals they cannot syndicate,and they are desperate to get them off their balance sheets.Loans and bonds have traded lower,making the secondary market attractive.Inflation is driving down margins of otherwise good companies and creating opportu-nities to bu

181、y securities in the 70s that are likely to recover to par.We expect to see continued pressure on companies and anticipate default rates to rise from low levels.Historically,it takes a recession to bring inflation off its peak,and the central banks have made clear that they are willing to take that r

182、isk.While spreads have widened and defaults have increased,they are not near the levels of past economic downturns.Managers are patiently waiting for what is likely to be a prolonged distressed cycle across a range of industries.Credit opportunities managers normally have flexible mandates that allo

183、w them to generate double-digit returns deploying capital in performing credit and early-stage stress situations.In contrast,specialized managersincluding distressed managersmay not always find the environment conducive for investing.Performance of managers will vary,and managers with strong portfol

184、io monitoring teams and experi-enced workout teams are likely to fair better.Frank Fama Global Co-Head of Credit Investment GroupSHARP DECLINE IN PUBLIC MARKETS NEW ISSUANCEJanuary 30,2021 November 30,2022 US$BillionsSources:Morningstar,Inc.LCD and PitchBook.0204060801001201401/213/215/217/219/2111/

185、211/223/225/227/229/2211/22European LoansEuropean BondsUS LoansUS Bonds21OUTLOOK 2023*Diverse-owned firms are defined as those that are over 50%women-or minority-owned.*For more on this topic see Madeline Clark,“Sustainable and Impact Investing:Insights and Perspectives,”Cambridge Associates LLC,202

186、2.Diverse Manager Net Flows Will Remain Positive,Supported by Governance Structures in 2023Jasmine Richards Head of Diverse Manager ResearchUS public pension plans have long been investors with diverse fund managers.In recent years,this focus has expanded to family offices,corporate pensions,endow-m

187、ents,and foundations.While allocators journeys have varied,many have created diverse investing objectives,codified these in investment policies,and begun imple-mentation.With structural changes in place,we expect allocators to continue driving capital to diverse managers in 2023.In the wake of incre

188、ased social unrest due to global inequality,many asset owners have begun to examine diversity within their portfolios.Understanding that less than 2%of global assets are invested with women or people of color,*many asset owners are seeking to be more intentional about their investment with diverse m

189、anagers.With this interest,diverse fund managers are on pace to raise historic levels of assets in 2022,which is even more notable given the challenging fundraising environment.Historically,allocations to diverse managers have waned during periods of market stress.During these periods,new manager re

190、lationships can be perceived as risky particularly with firms that are younger or have lower assets under management(AUM).Given that many asset owners are currently over-allocated to private invest-mentsthe area of highest new fund starts for diverse managersthe market could pose specific challenges

191、 for sustained AUM growth for diverse fund managers.Despite these headwinds,data indicates that governance revisions instituted in recent years will support continued commitment to increasing diversity among manager lineups of asset owners.Data from a recent CA client survey*show that 15%of survey r

192、espondents have codified their diversity,equity,and inclusion objectives in investment policy statements,an increase of more than 10 times since 2020.Of the respondents who have implemented diverse manager strategies,95%indicated that they have increased allocations over the last five years.Addition

193、ally,92%anticipate increasing their allocations even further over the next five years.While market headwinds create higher bars for new commitments,the structural policies and programs that have been implemented in the recent past will support continued commitment to investments in diverse fund mana

194、gers.Carolina Gmez Associate Investment Director,Diverse Manager ResearchCAPITAL RAISED BY US PRIVATE DIVERSE MANAGERS HAS INCREASED OVER TIME201022*Data for 2022 are as of October 10.Source:Cambridge Associates LLC.020406000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Numb

195、er of FundsCapital Raised vs Fund Size(US$Billions)Growth EquityBuyoutsVenture CapitalTotal Number of Funds*22OUTLOOK 2023Private Equity Will Sail in Stormy Seas in 2023Keirsten Lawton Co-Head of US Private Equity ResearchWe expect continued headwinds for private equity(PE).Weak economic activity,di

196、ffi-cult political environments,and tight credit markets will pressure current valuations and slow investment and realization activity.While public equities quickly reflected these concerns in 2022,private markets reacted more slowly.Multiples are trending lower but strong earnings growth has mitiga

197、ted the mark-to-market impact thus far.In 2022,we saw a drop in activity.Heading into 2023,transaction activity should continue to be slower as valuations settle and lending costs increase,and this lull should favor buyers.General partners(GPs)with mature assets to sell may delay exits given volatil

198、e markets pressured by uncertainty.Investors should expect longer holds,and perhaps more GP-sponsored continuation vehicles.Fewer realizations will result in fewer limited partner(LP)distributions,which since the beginning of 2011 have averaged$1.49 for every PE dollar drawn,enabling new PE commitme

199、nts.However,in 2023 we do expect capital calls to pick up given GPs have near-record dry powder.We believe new investment activity,while slower than recent years,will precede a return to robust realizations.The potential of fewer distributions raises the specter of liquidity concerns for LPs as they

200、 might need to fund their PE commitments from other sources for the first time in years.In the current market,GPs are focusing on company-specific actions,risks,and oppor-tunities.From a value creation perspective,revenue growth and EBITDA margins are primary levers of returns,but amid a tight labor

201、 market,GPs are also seeking to pull the talent management lever.On the risk side,GPs are revisiting recession scenarios,managing expenses,and monitoring sales.They have raised prices to compensate for higher inflation,which might not be a sustainable strategy.COVID-era PE returns were strong but la

202、rgely unrealized and not likely to be sustained in the current market.History has shown that funds deployed at high valuations based on high growth expectations(such as the pre-GFC vintages)posted below-average net internal rates of return,and it is likely that recent vintages will suffer the same f

203、ate.Conversely,recession-era vintages,invested at more moderate valuations,have historically outperformed growth expectations and achieved multiple expansion at exit.So,while todays environment could hurt current portfolios,the 2023 vintage could benefit from the valuation reset.Caryn Slotsky Senior

204、 Investment Director,Private Investment Strategy ResearchRECESSION ERA VINTAGES HAVE SHOWN RESILIENCEAs of June 30,2022 Net to Limited PartnersSource:Cambridge Associates LLC.0.0 x0.5x1.0 x1.5x2.0 x2.5x3.0 x0%5%10%15%20%25%30%2000(65)2001(30)2002(22)2003(25)2004(42)2005(67)2006(67)2007(70)2008(55)20

205、09(32)2010(24)2011(34)2012(46)2013(49)2014(57)2015(64)2016(63)2017(46)2018(68)2019(84)Multiple of Paid In CapitalNet to LP IRR(%)Vintage YearIRR(LHS)TVPI(RHS)DPI(RHS)23OUTLOOK 2023Venture Capital Interest in India and Southeast Asia will Continue to Increase in 2023Vish Ramaswami Managing Director,H

206、ead of Asia PE/VC ResearchGeopolitical dynamics and the uncertainty generated by Chinas zero-COVID policy have dampened investor activity in China venture capital(VC).Concurrently,interest has increased in India and Southeast Asia as potential alternative growth and venture markets,which we expect w

207、ill continue next year.In India,the entrepreneur ecosystem is maturing and there has been a buildup of strong domestic and foreign VC presence.Government and private-sector initiatives introduced over the past decade have facilitated the development of financial and digital infrastructure,creating a

208、 fertile opportunity set for start-ups operating in the domestic consumer and enterprise space.Consumer technology,fintech,and soft-ware-as-a-service(SaaS)deals have dominated investment activity,leading to a rise in the number of India unicorns in recent years.While the India VC market is looking m

209、ore proven and attractive vis-vis a decade ago,investors should be mindful that the market depth and track record of managers will continue to take time to build.The same investment themes apply in Southeast Asia,given the rise of internet penetration in markets such as Indonesia and Vietnam.The reg

210、ion likely boasts the second-largest slate of VC managers in Asia after China.However,the market is frag-mented across many countries with varied levels of infrastructure development and talent pools,posing unique challenges to scaling and growing businesses.As a result,Southeast Asia VC still lags

211、China or India VC and requires more validation.In China,the story is mixed.Consumer technology themes have plateaued,given market developments and regulatory headwinds.But Chinas increased emphasis on self-sufficiency and innovation in the clean energy and“deep technology”sectors(e.g.,semiconductors

212、,automation),supported by the already well-developed supply chain and advanced manufacturing capabilities,presents a secular growth opportunity for companies in these areas.A core challenge is whether the US or Chinese government will place restrictions on investing in these sectors.Meanwhile,any cl

213、arity on the lifting of Chinas zero-COVID policy could trigger a rebound in Chinas growth pros-pects and its financial markets,leading to a renewed surge in China VC deal activity and fundraising.CHINA VC FUNDRAISING AND DEAL ACTIVITY COOLED IN 2022201222 US$BillionsSource:PitchBook.0204060801001201

214、4002468000H2022Total Deal ValueCapital Raised by USD-Denominated FundsForeign Investor Fundraising(LHS)Deal Activity(RHS)24OUTLOOK 2023The Office Sector Will Finally Present Attractive Investment Opportunities in 2023Marc Cardillo Global Head of Real Asset

215、sAlthough it has been nearly three years since the pandemic began,considerable uncertainty remains regarding the future of the office sector.Performance has severely lagged other property types.MetLife estimates that remote work has contributed 400 basis points to the current elevated 16.8%US vacanc

216、y rate,although the impact on office cash flows has been limited,given the sectors long-term lease structures.However,this dynamic has begun to evolve as leases executed prior to COVID-19 begin to expire.Many office owners with looming debt maturities will be faced with the challenge of trying to re

217、finance properties with declining cash flows in a higher interest rate and more restrictive lending environment.These pressures should lead to rising loan defaults and create opportunities for discerning investors to acquire high-quality office properties at attractive valuations.OFFICE RETURNS HAVE

218、 LAGGED OTHER PROPERTY TYPESAs of September 30,2022 Cumulative Trailing 12-Month Total ReturnSource:National Council of Real Estate Investment Fiduciaries(NCREIF)Property Index.34.6%18.2%6.6%3.2%IndustrialApartmentRetailOfficeHowever,investors will need to be highly selective,as value traps abound.T

219、he quality of physical space and a propertys amenities have grown in importance as tenants have more choices available to them and companies need to give their employees a compel-ling reason to come to the office.The building attributes with the greatest demand include flexible open space,shared mee

220、ting areas,sustainable building features,onsite food options,outdoor amenities,and even concierge services.Many of these require-ments are best met by modern office properties.As a result,the office sector has become increasingly bifurcated into a world of“haves”and“have nots,”with the newest,best a

221、menitized properties garnering the lions share of leasing activity relative to older,class B products.JLL estimates that over the past two years,the office sector has experienced over 153 million square feet of negative net absorption.However,properties built after 2014 experienced positive net abso

222、rption of over 61 million square feet.The growing emphasis on sustainability will only accelerate the bifurcation in office markets.Opportunities will emerge to renovate and transform certain office buildings to meet the various green certification standards that tenants increasingly seek,partic-ula

223、rly in several European cities,which have more aggressive carbon reduction goals.25OUTLOOK 2023Gold Bullions Performance Should Improve in 2023 Sean Duffin Investment Director,Capital Markets ResearchEver since the gold price soared during the great inflation of the 1970s,many investors believed tha

224、t gold would rally again whenever high inflation resurfaced.That inflation reckoning finally happened in 2022,and yet,gold declined in USD terms.The sharp rise in real yields and broad-based dollar strength were two key factors that drove this performance,but there are reasons to believe that these

225、factors could lose potency in 2023.We expect golds performance will improve after declining 3.9%in 2022,which ranked near the bottom quartile of its annual returns since 1970.Gold has historically been sensitive to changes in real interest rates.The yield of the ten-year inflation-linked bond rose m

226、ore than 250 basis points so far in 2022,but gold prices didnt decline as sharply as might be expected.This suggests that golds price was supported by demand linked to heightened geopolitical risks and inflationary concerns.We also shouldnt expect the same trajectory of steep yield increases in 2023

227、.The forward market implies ten-year real yields will end 2023 at the same level as today.The dollars strength is another key reason the price of gold stumbled in 2022.Non-USD based investors have benefited from the currency gap,as the yellow metal posted positive returns in most major currencies.Wh

228、ile the dollar is likely to remain supported in the near term,it is richly valued and has enjoyed a lengthy period of cyclical strength.This suggests the additional pressure the dollar will put on gold next year will likely be smaller than in 2022.Finally,given the uncertainty surrounding central ba

229、nks efforts to rein in inflation,we expect economic growth will be weak.That could be another support for gold,as it has tended to be historically.Still,gold is speculative,and it is more difficult to own when fixed income securities offer better yields than a year ago.GOLD PRICES HAVE BEEN CLOSELY

230、LINKED TO MOVEMENTS IN REAL YIELDSDecember 31,2005 November 30,2022 Sources:Intercontinental Exchange,Inc.and Thomson Reuters Datastream.-1.5%-0.5%0.5%1.5%2.5%3.5%02505007501,0001,2501,5001,7502,0002,2502005200720092001720192021US$Gold Price(LHS)Real 10-Yr US Yield(Inverted RHS)26OUTLOOK

231、2023*Bitcoins largest calendar-year gain since 2015 was in 2017 when it was up 1,394%.In 2020,Ethereums best year,it returned 473%.Digital Assets Will Not Eclipse Prior Highs in 2023 Joseph Marenda Head of Digital Assets InvestingEconomic and interest rate headwinds,as well as simple math,will make

232、it difficult for many digital assets to surpass prior highs in 2023.On the latter,digital assets that are down 50%would need to return 100%to reach prior highs,and those down 80%would need to return 500%!While bitcoin,ether,and altcoins have posted gains on this order of magnitude or greater,histori

233、cally these gains were in the context of strong macro tailwinds.*Still,our long-term view of the blockchain as a positive new technology remains unchanged.To be sure,it is still developing use cases and building its user base,which will contribute to the asset classs volatility.But prior crypto wint

234、ers have been periods of significant technological progress,and major innovations launched following those winters.Given the pace of venture investment during this winter,technological progress will likely again blossom.A difficult macro environment may set up an opportunity for some patient investo

235、rs to enter the digital asset space.Historically,buying risk assets that have sold off heavily has typically been a good strategy.And while valuing digital assets is difficult,venture capital(VC)valuations in late 2022 are down materially,which suggests the ecosystem,broadly speaking,is more attract

236、ively priced today than a year ago.Investors typically enter the space via three main channels:buying digital assets,such as bitcoin,directly;VC funds;and hedge funds.We tend to prefer seed and early-stage venture,given valuations and the strong alignment between investor and founder.But hedge funds

237、 are also a possibility,as trading inefficiencies and information asymme-tries abound.Allocation size is highly portfolio specific,especially for investors with mature VC allocations,which most likely have exposure already.In 2023,other downside risks include(1)distress among bitcoin miners,which co

238、uld force miners to sell their balance sheet bitcoin,driving down other tokens,(2)follow-on failures due to FTXs collapse,and(3)more FTX-like collapses linked to weak governance and poor business practices.DIGITAL ASSETS VOLATILITY IS HIGHAs of November 30,2022 Percent(%)Trailing Five YearsSources:B

239、itstamp LTD.,Bloomberg Index Services Limited,Intercontinental Exchange,Inc.,NASDAQ,Standard&Poors,and Thomson Reuters Datastream.5.113.221.418.482.3US TreasuriesGoldNasdaq 100US EquitiesBitcoin27OUTLOOK 20232023 Will Not be a Repeat of the Dollars Annus MirabilisThomas OMahony Investment Director,C

240、apital Markets ResearchThe US dollar experienced a rapid appreciation during 2022.Based on our developed markets(DM)trade-weighted index,which keeps current weights constant,its year-to-date rise of 10.8%is on track to be the sixth largest calendar-year gain for the greenback based on data going bac

241、k to 1972.Various factors drove this performance.It began with a widening of interest rate differ-entials,as the Federal Reserve became more hawkish.This was followed by a widening in expected growth differentials,as the implications of the war in Ukraine for activity in Europe started to become cle

242、ar.The dollar also benefited all the while from its role as a risk-off currency and broader safe haven,as equity markets declined.The perfor-mance challenges facing other traditional safe havens,such as Treasuries and gold,helped its standing in this regard.This rally leaves the dollar looking expen

243、sive from a long-term perspective.Its real effective exchange rate reached the 100th percentile of our DM basket in October and now sits at the 98th percentile.In addition,the maximum real appreciation this cycle,at 62%,is comparable to the average of 68%seen in the two prior dollar cycles.In recent

244、 decades,peaks in the US dollar have typically been associated with troughs in global activity,alongside an easing Fed.Growing recessionary fears and the softer-than-anticipated US CPI data for October saw the dollar weaken in November,as the odds of these conditions being satisfied in 2023 rose.Whi

245、le it is possible that we have seen the peak in the dollar for this cycle,we see several factors continuing to act as supports for the greenback in 2023 even if further upside is limited.First,given we believe that inflation risks are skewed to either matching or exceeding current above-target expec

246、tations,we doubt the market will price in a deep rate-cutting cycle,keeping interest rate differentials extended.Second,additional rate hikes in Europe,even as a recession there seems likely,is a further headwind to growth beyond that of the direct impact of the energy crisis.Finally,were a meaningf

247、ul US recession to take hold,further investor de-risking would likely see the dollar benefit from safe-haven seeking flows.THE DOLLARS REAL VALUATION IS HISTORICALLY ELEVATEDJune 30,1971 November 30,2022Sources:Eurostat,Federal Reserve,MSCI Inc.,OECD,Refinitiv,and Thomson Reuters Datastream.MSCI dat

248、a provided“as is”without any express or implied warranties.9898025507506201120162021Trade-WeightedEquity-Weighted28OUTLOOK 2023Figure Notes Equity Market Recoveries Tend to Deliver Abnormal Returns Data are monthly and reflect the one-year performance following each

249、of the nine equity market downturns since 1970.The median one-year return in based on the entire index history,or 1970 to present.Bear markets are based on a peak-to-trough change in the MSCI World Price Index in USD terms of at least 20%.Asset Class Leaders Vary as the Macro Landscape Shifts Privat

250、e indexes are one-year pooled horizon internal rate of return(IRR)calculations,net of fees,expenses,and carried interest.The timing and magnitude of fund cash flows are integral to the IRR performance calculation.Public indexes are average annual compounded return(AACR)calculations which are time we

251、ighted measures over the specified time horizon,and are shown for reference and directional purposes only.Due to the fundamental differences between the two calculations,direct comparison of IRRs to AACRs is not recommended.Hedge Fund Research,Inc.data revise prior five months data.Data for 2022 are

252、 as of June 30 for Private Equity,September 30 for Real Estate,October 31 for Hedge Funds,and November 30 for all others.US Companies Citing ESG on Earnings Calls Has Increased Data represent S&P 500 constituents.Data are based on the calendar quarter in which each earnings call took place.Prices Ar

253、e Mixed With Slower Moving Items(e.g.,Rents)Still Increasing Flexible CPI and Sticky CPI are calculated by the Atlanta Fed and represent weighted baskets of CPI components,which tend to change quickly and slowly,respectively.According to the Atlanta Fed,Flexible CPI tends to respond more power-fully

254、 to economic conditions,whereas Sticky CPI is more associated with expectations about future inflation.10-Yr Us Treasury Excess Return vs Cash Typically Bottoms When the Fed Stops Tightening Data are monthly.Credit Yields Have Retraced Higher in 2022 Asset classes represented by:Bloomberg US Corpora

255、te High Yield Index(US HY),Bloomberg Pan-European High Yield Index(Euro HY),Credit Suisse Leveraged Loan Index(US LL),Bloomberg US Corporate Investment Grade Index(US IG),Bloomberg Pan-European Aggregate Corporate Index(Euro IG),Bloomberg Sterling Aggregate Corporate Index(GBP IG),J.P.Morgan EMBI Gl

256、obal Diversified Index(EM USD(Sov),J.P.Morgan CEMBI Diversified Index(EM USD(Corp),J.P.Morgan CLOIE AAA Index(CLO AAA),J.P.Morgan CLOIE BBB Index(CLO BBB),J.P.Morgan CLOIE BB Index(CLO BB),and Bloomberg US CMBS Baa Index(CMBS BBB).Global Corporate Sales Growth Is Linked to Global Economic Growth All

257、 data reflect nominal calendar year growth rates.The MSCI ACWI is used to determine global sales growth.Sector Dominance Does Not Last Graph represents sector weightings in the Datastream World equity index.Eurozone Inflation Is Broadening Out Eurozone core inflation excludes energy,food,alcohol,and

258、 tobacco.Core Euro Area Government Bond Yields Have Driven the Rise in Periphery Country Yields Data are monthly.Easing of Lockdowns Should See Chinese Equities Outperform GS China Effective Lockdown Index data are through November 29.EM Earnings Expectations and Valuations Are Low EPS growth number

259、s are based on I/B/E/S estimates.The cyclically adjusted price-tocash earnings(CAPCE)ratio is calculated by dividing the inflation-adjusted index price by trailing ten-year average inflation-adjusted cash earnings.Cash earnings are defined as net income from continuing operations plus depreciation a

260、nd amortization expense.MSCI does not publish cash earnings for banks and insurance companies and therefore excludes these two industry groups from index-level cash earnings.EM is cyclically adjusted by trailing five-year data.Industry-Loss Warranty Pricing Is Now More Conservative An industry loss

261、warranty is a reinsurance contract that pays out when the financial losses experienced exceed a specified threshold.Short Rebate Has Returned to Positive Territory The short rebate is represented by the effective federal funds rate minus a 50-bp spread.Macro Hedge Funds Tend to Do Better Than 60/40

262、in Large Positive Inflation Surprises The 60/40 portfolio is composed of MSCI ACWI(gross returns)and Bloomberg Aggregate Bond Index.Inflation surprises represented by the US Citigroup Economic Surprise Index and are divided into four separate quartiles,ranging from first quartile which represents la

263、rge negative inflation surprises to fourth quartile which represents large positive inflation surprises.There have been 24 large positive inflation surprises,23 modestly positive to modestly negative inflation surprises,24 negative inflation surprises,and 24 large negative inflation surprises.Sharp

264、Decline in Public Markets New Issuance Recent months data may revise.Capital Raised by US Private Diverse Managers Has Increased Over Time Figures represent capital raised by funds based in the United States.Vintage year is defined as expected year of first closing.Fund size is represented by fundra

265、ising target.“Diverse”classification is based on information provided by managers who reported a 33%diversity level on a Cambridge Associates survey.Minority groups include gender and race.Data are continuously updated and thus subject to change.29OUTLOOK 2023Recession Era Vintages Have Shown Resili

266、ence Internal rates of return are net of fees,expenses,and carried interest.Private equity includes buyout and growth equity funds.Numbers in parentheses represent fund count in each vintage year.Sample size for each cohort is shown in paren-theses.Vintage year is based on first cash flow.Funds less

267、 than three years old are considered too young to have produced meaningful returns;those vintages have been excluded from this analysis.Data are continuously updated and thus subject to change.China VC Fundraising and Deal Activity Cooled in 2022 Foreign investor fundraising reflects capital raised

268、by USD-denominated funds.Deal activity reflects capital invested by both USD-and RMB-denominated funds.Digital Assets Volatility Is High Standard deviation based on monthly returns.The Dollars Real Valuation Is Historically Elevated Australian inflation data are quarterly and as of September 30,2022

269、.Eurozone inflation data are as of November 30,2022,and are preliminary.All other inflation data are as of October 31,2022.iNDeX DescriptioNs Bloomberg US Aggregate Bond Index The Bloomberg US Aggregate Bond Index is market capitalizationweighted and includes Treasury securities,government agency bo

270、nds,mortgage-backed bonds,and corporate bonds.It excludes municipal bonds and Treasury inflation-pro-tected securities because of tax treatment.Bloomberg Pan-European Aggregate Corporate Index The Bloomberg Pan-European Aggregate Bond Index is a broad-based flagship benchmark that measures fixed-rat

271、e,investment grade securities in the following European currencies:Swiss Franc,Czech Koruna,Danish Krone,Euro,British Pound,Hungarian Forint,Norwegian Krone,Polish Zloty,Romanian Leu,Russian Ruble,and Swedish Krona.The principal asset classes are treasuries,government-related,corporate,and securitiz

272、ed,which include Pfandbriefe,other covered bonds and asset-backed securities.Inclusion is based on currency denomination of a bond and not country of risk of the issuer.The Pan-European Aggregate is a component of other flagship indexes,such as the multi-currency Global Aggregate Index.Bloomberg Pan

273、-European High Yield Index The Bloomberg Pan-European High Yield Index measures the market of noninvestment-grade,fixed-rate corporate bonds denominated in the following currencies:euro,pound sterling,Danish krone,Norwegian krone,Swedish krona,and Swiss franc.Inclusion is based on the currency of is

274、sue,and not the domicile of the issuer.Bloomberg Sterling Aggregate Corporate Index The Bloomberg Sterling Aggregate Bond Index is a flagship benchmark that measures the investment grade,sterling-denom-inated,fixed-rate bond market,including treasuries,government-related,corporate,and securitized is

275、sues.Inclusion is based on the currency denomination of a bond,not country of risk of the issuer.The Sterling Aggregate is a component of other Bloomberg Barclays flagship indices such as the multi-currency Global Aggregate and Pan-European Aggregate Indexes.Bloomberg Barclays US CMBS Baa Index The

276、Bloomberg Barclays CMBS Index has been designed to measure the performance of investment-grade commercial mortgage-backed securities(CMBS)market.This index is the Baa component of the Investment Grade CMBS index.For investment-grade sectors,securities must be rated investment grade(Baa3/BBB-or highe

277、r)by at least two of the following ratings agencies:Moodys,S&P,and Fitch.If only two of the three agencies rate the security,the lower rating is used to determine index eligibility.If only one of the three agencies rates a security,the rating must be investment grade.Bloomberg US Corporate High Yiel

278、d Index The Bloomberg US Corporate High Yield Index measures the US corporate market of non-investment grade,fixed-rate corporate bonds.Securities are classified as high yield if the middle rating of Moodys,Fitch,and S&P is Ba1/BB+/BB+or below.Bloomberg US Corporate Investment Grade Bond Index The B

279、loomberg US Corporate Investment Grade Bond Index measures the investment-grade,fixed-rate,taxable corporate bond market.It includes USD-denominated securities publicly issued by US and non-US industrial,utility,and financial issuers.Credit Suisse Leveraged Loan Index Credit Suisse Leveraged Loan In

280、dex is a market-weighted index that tracks the performance of institutional leveraged loans.Goldman Sachs China Effective Lockdown Index(ELI)The GS China Effective Lockdown Index is a combination of official restrictions and actual mobility data.J.P.Morgan CEMBI Diversified Index The J.P.Morgan Corp

281、orate Emerging Markets Bond Index Broad Diversified(CEMBI Broad Diversified)is an expansion of the J.P.Morgan Corporate Emerging Markets Bond Index(CEMBI).The CEMBI is a market capitalization weighted index consisting of USD-denominated emerging markets corporate bonds.J.P.Morgan Collateralized Loan

282、 Obligation Index(CLOIE)CLOIE offers total returns and analytics based on observable pricings of a representative pool of bonds following a stated methodology and is published daily.The index holistically captures the USD-denominated CLO market,representing more than 3,000 instruments at a total par

283、 value of US$236.1 billion.Market participants can track securitized loan market valuations.CLOIE tracks floating-rate CLO securities in 2004present vintages.Additional sub-indices are divided by ratings AAA through BB,and further divided between pre-and post-crisis vintages.CLO 2.0,or post-crisis v

284、intages,consists of deals issued in 2010 and later.CLOIE utilizes a market-value weighted methodology.30Copyright 2022 by Cambridge Associates LLC.All rights reserved.This report may not be displayed,reproduced,distributed,transmitted,or used to create derivative works in any form,in whole or in por

285、tion,by any means,without written permission from Cambridge Associates LLC(“CA”).Copying of this publication is a violation of US and global copyright laws(e.g.,17 U.S.C.101 et seq.).Violators of this copyright may be subject to liability for substantial monetary damages.This report is provided for

286、informational purposes only.The information does not represent investment advice or recommendations,nor does it constitute an offer to sell or a solicitation of an offer to buy any securities.Any references to specific investments are for illustra-tive purposes only.The information herein does not c

287、onstitute a personal recommendation or take into account the particular investment objectives,financial situations,or needs of individual clients.Information in this report or on which the information is based may be based on publicly available data.CA considers such data reliable but does not repre

288、sent it as accurate,complete,or independently verified,and it should not be relied on as such.Nothing contained in this report should be construed as the provision of tax,accounting,or legal advice.Past performance is not indicative of future performance.Broad-based securities indexes are unmanaged

289、and are not subject to fees and expenses typically associated with managed accounts or investment funds.Investments cannot be made directly in an index.Any information or opinions provided in this report are as of the date of the report,and CA is under no obligation to update the information or comm

290、unicate that any updates have been made.Information contained herein may have been provided by third parties,including investment firms providing information on returns and assets under management,and may not have been independently verified.The terms CA or Cambridge Associates may refer to any one

291、or more CA entity including:Cambridge Associates,LLC(a registered invest-ment adviser with the US Securities and Exchange Commission,a Commodity Trading Adviser registered with the US Commodity Futures Trading Commission and National Futures Association,and a Massachusetts limited liability company

292、with offices in Arlington,VA;Boston,MA;Dallas,TX;Menlo Park,CA,New York,NY;and San Francisco,CA),Cambridge Associates Limited(a registered limited company in England and Wales,No.06135829,that is authorised and regulated by the UK Financial Conduct Authority in the conduct of Investment Business,ref

293、erence number:474331);Cambridge Associates Limited,LLC(a registered investment adviser with the US Securities and Exchange Commission,an Exempt Market Dealer and Portfolio Manager in the Canadian provinces of Alberta,British Columbia,Manitoba,Newfoundland and Labrador,Nova Scotia,Ontario,Qubec,and S

294、askatchewan,and a Massachusetts limited liability company with a branch office in Sydney,Australia,ARBN 109 366 654),Cambridge Associates Investment Consultancy(Beijing)Ltd(a wholly owned subsidiary of Cambridge Associates,LLC which is registered with the Beijing Administration for Industry and Comm

295、erce,registration No.4972),and Cambridge Associates Asia Pte Ltd(a Singapore corporation,registration No.200101063G,which holds a Capital Market Services License to conduct Fund Management for Accredited and/or Institutional Investors only by the Monetary Authority of Singapore).OUTLOOK 2

296、023J.P.Morgan EMBI Global Diversified Index The J.P.Morgan EMBI Global Diversified Index is an unmanaged index that tracks total returns for dollar-denominated Brady bonds,Eurobonds,traded loans,and local market debt-instrument issues by sovereign and quasi-sovereign entities of emerging markets cou

297、ntries.MSCI All Country World Index The MSCI ACWI is a free floatadjusted,market capitalizationweighted index designed to measure the equity market performance of developed and emerging markets.The MSCI ACWI consists of 49 country indexes comprising 23 developed and 25 emerging markets country index

298、es.The developed markets country indexes included are:Australia,Austria,Belgium,Canada,Denmark,Finland,France,Germany,Hong Kong,Ireland,Israel,Italy,Japan,the Netherlands,New Zealand,Norway,Portugal,Singapore,Spain,Sweden,Switzerland,the United Kingdom,and the United States.The emerging markets coun

299、try indexes included are:Argentina,Brazil,Chile,China,Colombia,Czech Republic,Egypt,Greece,Hungary,India,Indonesia,Korea,Malaysia,Mexico,Pakistan,Peru,Philippines,Poland,Qatar,Saudi Arabia,South Africa,Taiwan,Thailand,Turkey,and the United Arab Emirates.MSCI World Index The MSCI World Index represen

300、ts a free floatadjusted,market capitalizationweighted index that is designed to measure the equity market performance of developed markets.It includes 23 developed markets country indexes:Australia,Austria,Belgium,Canada,Denmark,Finland,France,Germany,Hong Kong,Ireland,Israel,Italy,Japan,the Netherl

301、ands,New Zealand,Norway,Portugal,Singapore,Spain,Sweden,Switzerland,the United Kingdom,and the United States.S&P 500 Index The S&P 500 Index measures the stock performance of 500 large companies listed on stock exchanges in the United States.The S&P 500 is a capitalization-weighted index and the per

302、formance of the ten largest companies in the index account for 21.8%of the performance of the index.The average annual total return of the index,including dividends,since inception in 1926 has been 9.8%;however,there were several years where the index declined more than 30%.US Citigroup Economic Sur

303、prise Index Citigroup Economic Surprise Index represents the sum of the difference between official economic results and forecasts.With a sum over 0 its economic performance generally beats market expectations.With a sum below 0,its economic conditions are generally worse than expected.Drew Boyer,Tiffany DiLiberto,Christina Fenton-Neblett,Vivian Gan,Kristen Greiner,Song Han,David Kautter,Marcelo Morales,Kristin Roesch,and Ilona Vdovina also contributed to this publication.31