Alternative Investment Opportunities Through a Slowing Economy

What to do now We suggest that qualified investors maintaina disciplined, multi-year and cross-cycle approach to allocating capital to alternatives. In uncertain times like these, there is a natural urge tomaintain high cash balances, yet we feel that in times like these, alternative investments are an avenue for investors to be opportunistic, whilemaintaining long-termdiscipline. Across multiple alternativesstrategies suchas credit, buyouts, secondaries and hedge funds, there are myriad ways for qualified investors to engage in the current market environment throughalternatives that are simply not available nor feasible through traditional asset classes. As was emphasized in our2023 AlternativesWealth Outlook earlier this year, we believe that waitinguntil the dust settles wouldbe a mistake. With the Citi GlobalWealth Investments asset class Strategic Return Estimates of 17.6%, 10.6%and 9.1% 19 for private equity, real estate and hedge funds, respectively, the current environment provides an opportunityto seek liquidityand market dislocationsas they occur via specializedmanagers. We see several potential opportunities forqualified investors to look to alternative investments to leverage market weakness and capital inefficiencies ina slowingeconomyover the coming months. 19 Citi Global Wealth Investments’ data as of October 31, 2022. Strategic Return Estimates (“SRE”) based on indices are Citi Global Wealth Investments’ forecast of returns over a 10- year time horizon for specific asset classes (to which the index belongs). Indices are used to proxy for each asset class. Cash refers to the US Cash SRE. The forecast for each specific asset class is made using a proprietary methodology that isappropriate for that asset class. Equity asset classes use a proprietary forecasting methodology based on the assumption that equity valuations revert to their long-term trend over time. The methodology is builtaround specific valuation measures that require several stages of calculation. Assumptions on the projected growth of earnings and dividends are additionally applied to calculate the SRE of the equity asset class. Hedge Fund and Private Equity SREs are linked to equity SREs. Fixed Income asset class forecasts use a proprietary forecasting methodology that isbased on current yield levels. Other asset classes use other specific forecasting methodologies. SREs are in US dollars. SREs are generally updated on an annual basis, however they may be updated off cycle based onmarket conditions or methodology adjustments. Strategic Return Estimates are no guarantee of future performance. SREs do not reflect the deduction of client fees and expenses. Future rates of return cannot be predicted with certainty. Investments that pay higher rates of return are often subject to higher risk and greater potential loss in an extreme scenario. The actual rate of return on investments can vary widely. This includes the potential lossof principal on your investment. It is not possible to invest directly in an index. All SRE information shown above is hypothetical, not the actual performance of any client account. Hypothetical information reflects the application of a model methodology and selection of securities in hindsight. No hypothetical record can completely account for the impact of financial risk in actual trading. WHAT TO DO NOW | WEALTHOUTLOOK 2023 | MID-YEAR EDITION │ ALTERNATIVE INVESTMENTS | 27