Most of the performance data in this report is through September 30, when "blue skies" prevailed. By year-end, however, sentiment had shifted dramatically. As such, private fund investors should anticipate some degradation in valuations in fourth quarter reports, particularly in holdings that are energy-related, credit-related, or valued based on public market comparisons—real estate and infrastructure generally excluded. There is a tricky balance between caution and opportunity, but if the general backdrop remains accommodative, more years of blue skies are possible.
Fourth Quarter 2018 Market Commentary
2018 was a challenging year for investors on many fronts with steep total return declines across the global investible universe. The fourth quarter punctuated a year that will go down in history as one that most investors would likely prefer to forget, with strong risk-off clouds darkening the markets, particularly in December. From the constant torrent of worrisome geopolitical developments to immediate macro risks—such as unresolved trade tensions, and fears of a global slowdown triggered by removal of global central bank-supplied liquidity and waning fiscal stimulus tailwinds—global asset allocators were presented with a remarkably difficult market environment to navigate.