List of Investments

Moderate global economic growth for the foreseeable future has set in and appears to be the new normal. At the same time, usual late-cycle limits, most notably an overheating in factors such as wage and price inflation that would prompt central banks to tighten even as recession risks rise, are not visible. On the contrary, interest rates fell during the year. As a result, we believe we are in a slow-moving cycle or to say it differently: even lower for even longer.

In this environment of moderate growth and low rates, Real Assets fundamentals remain sound (as discussed in the previous section). New construction remains in check in a vast majority of global real estate and infrastructure markets, with a combination of disciplined lending markets and structural barriers such as higher construction costs and policy uncertainties. As a result of this relative demand-supply balance, and in line with the last few years, income growth has driven healthy and stable Real Assets returns.

While from a high level, the market may appear similar to 2019, there are divergences across both sectors and markets (more on that in the next theme). Even though we have experienced an unusually long and stable cycle, cycles are not dead; rather, they are stretched and bumpier. In such a market it is important to remain cognizant of any emerging imbalances. Patience, risk control and flexibility remain critical.