A January 2024 'Endowus' survey of over 50 fund managers reveals shifting priorities amid economic uncertainty, with geopolitical tensions displacing worries over central bank missteps as the top concern now that inflation has moderated. While managers expect mild US GDP growth of 1.6% and global growth of 2.6% for 2024, nearly half believe the US will avoid recession completely, conveying cautious optimism. The divided preferences expressed for equities, fixed income, and alternatives underscore the difficulty of identifying the year's best investment opportunities amidst mixed outlooks. In a reversal from 2023, US and developed market equities are favored over emerging markets this year, even as slowing growth anticipated by many managers prompts a focus on quality stocks and long duration bonds to temper risk. Still, the diversification benefits of alternatives like private markets hold appeal at a time of sputtering global growth, granting access to innovative sectors untethered from lackluster public markets. Though the path forward remains unclear, fund managers appear to be balancing lingering risks with hopes of resilience in 2024 through tactical bets on assets poised to weather uncertainty.

"Fast forward to 2024. With inflation (somewhat) under control and the US economy still showing signs of resilience, investors have redirected their attention to other lurking issues. Foremost on the minds of most respondents in the survey is the prevailing geopolitical risk. However, central bank policy missteps, inflation, and recession are not too far behind."

Min Axthelm, Endowus

Despite boasting over half a million users and partnerships with top asset managers, leading alternative investment platforms like iCapital and CAIS have gained little traction among single-family offices. A recent survey found that the vast majority of these ultra-high-net-worth investors source deals through their own networks, with only 2% utilizing iCapital and none tapping CAIS as a primary channel. This reluctance reflects the unique position of sizable family offices, which already possess robust operations, premier access to deals, and negotiating leverage with GPs. With less need for administrative relief or fund selection, family offices are more interested in leveraging direct relationships and co-investments to optimize deal terms and ideas. Though CAIS touts growing family office adoption, the reality remains that these influential investors primarily rely on trusted peers over flashy platforms. Given their scale, sway, and selectivity, family offices seem poised to continue circumventing even the most reputable alternative investment marketplaces.

Though inflation remains elevated on both sides of the Atlantic, its path is diverging between the US and Europe. Over the past months, US inflation has stagnated just above 3% as persistent service sector price growth, especially in housing, offsets progress in other areas. Meanwhile, European inflation has steadily declined across categories, dipping below 3% since June. With CPI retreating faster towards the ECB's 2% target, Europe seems on a quicker trajectory to taming inflation than the stagnant US. This partly reflects Europe's larger exposure to weakened global demand and falling commodity prices. It also highlights differing policy responses, as aggressive ECB hikes cool Europe's economy faster than the Fed's measured tightening. The Atlantic divide shows inflation is not following a uniform path out of this crisis. As central banks chart their next moves, Europe's momentum in lowering inflation may allow earlier rate cut opportunities compared to still-sticky US price growth.

The Sustainable Shift: How Family Offices Are Driving Change

https://www.forbes.com/sites/lbsbusinessstrategyreview/2024/02/28/achieving-sustainability-emerging-trends-and-opportunities-for-family-offices/?sh=6cfc9c843395

Written by:

Andrew Popp | Sr. Research Associate