Insights

Alternatives

Charted territory: Playbook for a new stock-bond correlation regime

The positive correlation between stocks and bonds has broken a 20-year trend of low-maintenance diversification. We argue this is not a cyclical anomaly but the start of a new regime.

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Private markets outlook: Refilling the glass

Our experts examine private markets and the outlooks for private equity, private credit and commercial real estate in 2025.

Mapping the markets: Q4 2024

Our Investment Research team compiled their best charts and latest market analysis across macroeconomics, public markets and private market strategies to help our clients map today’s markets.

Chart of the week

As small caps return to favor, quality remains a concern

Markets have turned risk-on since the election, as investors again embrace small caps. But 43% of Russell 2000 companies generate negative earnings.

Line chart showing the percentage of Russell 2000 (small cap) companies that generate negative earnings. The percentage has gradually moved higher, from 14% in 1994, to 43% as of Q3 2024. The diminishing quality of public small cap companies highlights the larger shift in the investment opportunity set and suggests private markets may offer better access to firms with stronger growth prospects.

Chart of the week

Middle market PE funds outperform through rate hike cycle

Middle market private equity has outperformed mega cap PE since the Fed began to raise rates. It remains well positioned amid a cloudy rate outlook.

Line chart showing private equity returns by fund size since the Fed rate hike campaign began. Performance has been inversely correlated to size as mega cap PE funds, which rely more heavily on leverage, have underperformed in an elevated rate environment. Middle market PE, which drives performance through fundamental improvements, has outperformed.

Chart of the week

Historically high valuations challenge equity returns

Stocks have generated paltry forward returns during historical periods when valuations have been as high as they are today.

Graph showing the S&P 500’s forward returns over the 1-, 2-, 3-, 5- and 10-year periods within each of the index’s price/earnings quintile. Historical returns have been meager when the index is in its most expensive quintile, as it is today, ranging from a maximum of 5% over the 1-year period to just 2% over the subsequent 10-year period.

Mapping the markets: Q3 2024

We synthesize the latest analysis on macroeconomics, public markets and alternative strategies.

Showing 1–6 insights out of 123 results