It has been difficult for investors to earn positive total returns this year.


  • Despite the recent rally, the MSCI All Country world Index (ACWI) is down almost 10% this year, while the Bloomberg Global Aggregate Total Return Index has fallen some 20%.
  • In this market, finding either absolute return or diversification has been challenging.

But hedge funds have been a bright spot amid the market downturn.


  • Hedge funds overall have outperformed global equities and bonds this year.
  • Some strategies, like macro, have performed particularly well. The HFRI Macro Index returned 10.3% in the first nine months of the year.
  • We currently like macro funds, fixed income relative value, equity long/short with low net exposure, and multi-strategy funds.

The investment case for private markets is also compelling.


  • Between 2001 and 2021, global private equity returned 13.8%annually, compared to 7.1% in publicly-traded global equities. Putting fresh capital to work following declines in public markets has seen even better performance.
  • Private markets are traditionally less impacted by perceived volatility, news flow, and inefficiencies, enabling companies to focus on long-term value creation.
  • In the current environment, we see opportunities in secondaries, distressed/restructuring debt, and value-oriented buyout such as take-private deals, carveouts and divestitures.

Did you know?


  • Based on our analysis of Cambridge Associates' records dating back to 1995, the average annual return on global growth buyout funds launched a year after a peak in MSCI ACWI is 18.6%. This compares with 14.8% for funds launched in the year of a peak and 11.4% for funds launched in the year prior.
  • In the first half of this year, total secondaries deal volume worldwide stood at USD 57bn, surpassing the record USD 48bn set in 1H21, according to Jefferies' Global Secondary Market Review.
  • Macro managers typically have a broad mandate, allowing them to do relatively well in an environment of choppy or falling markets.

Investment view


With inflation data and central bank policy continuing to drive both equities and bonds, we recommend investors diversify into less correlated strategies such as hedge funds and private markets to navigate market uncertainty.


Main contributors - Daisy Tseng, Karim Cherif


Content is a product of the Chief Investment Office (CIO).


Original report - Is now the right time for alternatives?, 31 October 2022.