Alternative Investment Opportunities Through a Slowing Economy

Given the recent rally in technologystocks (NASDAQ up YTD30.1%as of June 22, 2023), 14 technology-focusedequityhedge fundswill focuson long investments that will benefit from longer term trends in areas like AI, cybersecurity, cloudand5G. There is also a potential opportunityto be short companies that may face near-term cyclical headwinds, lacka competitive advantage and/or are beingdisruptedby newcompetitors. Managers that have strong track records of identifyingwinners and losers in the technology ecosystemhave the potential to generate value. Energy security Humanity today is facinga wide array of pressing challenges, includingpoverty, food insecurity, aging populations, social inequitiesandclimate change. Facing these challengeswill require significant investment over the coming years and componentsof investment portfolioscan seek environmental and/or social benefits alongside competitive financial returns. According to Bloomberg, $1 of every $3 invested will be invested sustainably, representing $53 trillion globallyby 2025. 15 As ESG-aware investing evolves, we have seen asset managers take a variety of approaches to the space. For hedge funds, certain managers have looked to implement an “ESG integration” approach within theirportfolios. This is a technique that considersESG data and metrics to favor underlying investments withattractive ESG attributesand/or disfavor investments that have unattractive ESG attributes, while seeking to generate returns. In private equity, the climate-tech venture capital market has increased significantly, with climate representing the fastest growing sectorwithin venture capital, withan 84% CAGR since 2012 ( FIGURE 14 ). While there has been a great expansion in investment in climate across all asset classes, the venture capital sector is uniquelypositioned to be the innovation engine for effective solutions that can be deployedeffectively. Currently, the focus is on venture, as the pipeline in growth-stage opportunitiescontinues to build. Emerging climate tech startups are targeting a broad range of industries as they seek to add tangible utilityand value to endconsumers and business while simultaneouslydecarbonizing the economy. The opportunityto fund these companies in the early- to mid-stage remains attractive as the total addressable market continues tomature. 14 Bloomberg, as of April 28, 2023 15 “ESG Assets may hit $53 trillion by2025”, Bloomberg, February 23, 2021 OPPORTUNITIES | WEALTH OUTLOOK 2023 | MID-YEAR EDITION │ ALTERNATIVE INVESTMENTS | 23