Asset Class Overview January 2024

Amongst the ongoing uncertainty that investors are facing, we remain convinced that including an allocation to private markets can not only enhance total returns but also smooth the overall investment path. We continue to look for attractive investment opportunities that offer both portfolio diversification and attractive risk/return characteristics. While private markets are often seen as a single investment option, it is important to note that return dispersion tends to be relatively high across these assets compared to public market equity and bond strategies. Therefore, a disciplined and rigorous due diligence processes combined with sector selection and partnerships with experienced investment managers is crucial for investment success.

Below we provide some more detail on the outlook and opportunities across some of the private asset classes we cover.

Real Estate

The real estate sector has seen many headwinds over the past few years, with higher inflation and interest rates increasing the cost of capital and putting pressure on valuations. According to research data, transaction volume globally is down nearly 60% year-over-year. In the near term the environment is unlikely to change, and further valuation adjustments are possible.

However, the real estate asset class tends to perform well after periods of repricing, as those allow investors to purchase high-quality assets at discounted prices, and often below replacement costs. In the current environment, we believe that asset selection is especially important and investors looking to deploy capital should consider higher-quality properties, with income growth potential and / or those with restricted supply.

Our sector preference includes logistics and industrial assets, single-family rentals, self-storage, healthcare and childcare centres.

In addition to opportunities resulting from improved pricing, we see factors like demographic shifts, changing supply chains, and the transition to a low-carbon economy driving performance. These considerations should be integrated where possible to future proof portfolios.

Private Equity and Venture Capital

Private equity and venture remain in a period of adjustment. Economic and geopolitical uncertainty, higher rates and inflation have driven increases in the cost of capital, lower valuations, and shortage of exit opportunities. According to a report published by the Bank of America, deal activity dropped with year-over-year deal count declining by as much 40% in 2023. Nonetheless, private equity market has not shut down completely. Instead, private equity buyers have focused on quality of the investments, seeking industry-leading companies with strong cashflow and return on capital. Sectors like technology and healthcare continue to be attractive.

It is likely that capital market activity levels remain depressed over the near term, reducing exit opportunities for private equity investors. In this environment, many investors are turning to secondaries markets for liquidity. This growing need for exit avenues is creating an attractive opportunity.  We are looking to add exposure across secondaries over the coming year to take advantage of this. Elsewhere, we continue to prefer investments that align with long-term trends like digital disruption, demographic shifts, and the energy transition to a low-carbon economy. We look to capture return enhancements by managers with capability in middle markets, some complexity premia, deployment of unique sector-specific skills or operational improvements.

Private Credit

Private credit continues to be favoured by investors. According to a 2023 report by Preqin, the asset class has expanded to represent roughly USD $1.6 trillion of assets under management globally, bringing it to the size of more established public credit markets. Several factors are behind that growth, contraction in bank lending due to regulatory constraints, desire of borrowers to diversify their funding sources and search for the deal execution certainty, customized funding in a long-term partnership and smaller deal sizes. We expect the demand for private credit to remain elevated, which should continue to support the asset class performance.

Despite many positive tailwinds, private credit isn’t fully insulated from economic factors. We expect to see the higher cost of capital starting to impact borrowers over the next year and believe this will be an important driver of dispersion of returns across the private credit sector.

A detailed and defensive approach to investing, including structural protections, careful underwriting and credit selectivity, will be critical in 2024 for maintaining attractive all-in yields. We retain a positive view on asset-based lending. While direct lending looks more competitive these days, there is still a shortage of capital in sectors traditionally dominated by smaller borrowers, including asset-backed consumer loans and commercial real estate lending. Owning some collateral could prove to be a boon in the uncertain macroeconomic environment.


Being essential to the economy, infrastructure offers cashflows that are less tied to economic cycles. Furthermore, infrastructure assets often have long-term, inflation-linked contracts – a significant advantage in a volatile environment. These characteristics made infrastructure more resilient over the past years, with only some repricing evident in the secondary markets.

Over the longer term, we see many structural trends and forces supporting infrastructure investments. Firstly, the transition to a carbon neutral world requires updates to energy systems and investments across all sectors to decarbonize. Secondly, digital infrastructure is growing globally, increasing demand for fibre broadband, cell towers and data centres. Lastly, supply chains continue to undergo changes post the pandemic, further influenced by ongoing geopolitical fragmentation. This is driving investments in key logistics infrastructure such as railways, airports and ports.

While the asset class has many tailwinds, selecting the right investment manager and operator is paramount. The cheap financing that used to boost returns is gone, forcing many to use additional levers to create value and be more active owners. We expect greater dispersion in manager returns ahead, thus investment due diligence and selection remains critical to achieve long term returns.


We see agriculture as another sector that will likely benefit from long term trends, in particular those related to demographics and food security. The asset class provides portfolio diversification with attractive long-term returns. Being able to select within a middle market niche between very large institutional allocators and smaller family owners is where we see the most opportunity. Exposure to established operators with scale are preferable either directly or indirectly in the strategies we prefer where we can see track records of superior returns versus peer fund managers. There are a range of strategies we have researched that involve single or multiple aspects of agriculture related land, business, technology and water, each with their own unique characteristics that could provide diversification and returns.

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Private Market Outlook January 2024

Private Market Outlook January 2024

24 Jan 2024 by Anastassia Juventin

For most of the past year, investors grappled with elevated levels of uncertainty. While the Australian and US economies managed to (so far) avoid an economic hard landing, persistent inflation and higher interest rates remained a concern for capital allocators. In this environment, investment portfolios that included exposure to alternative asset classes tended to deliver higher and more consistent returns. For 2024 and beyond, we expect long-term structural trends to support further growth across private markets with opportunities from repricing persisting in the coming years.