Alternative Investment Opportunities Through a Slowing Economy

Within the backdropof 2022, alternative investments managers demonstrated their portfolio utilityby generally outperforming traditional stocks and bonds ( FIGURE 1 ). Private capital, as measured by the PitchbookPrivate Capital Index, generated a positive0.4% return 1 and hedge funds, demonstrated by the HFRI Fund WeightedCompositive Index, lost just 4.2% 2 in a market where the S&P 500 and MSCI World Indices experienced -18.1% total returns and the Barclays bond indices lost 11.0%and 11.2%, respectively. 3 FIGURE 1 : One Year Total Returns by Asset Class (as of December 31, 2022) Source: Bloomberg, HFRI, Pitchbook as of December 31, 2022. Treasuries represented by Bloomberg US Treasuries Index Total Return. High Yield represented by Bloomberg US Corporate High Yield Bond Index. Global Credit is represented by Bloomberg Barclays Global Aggregate Total Return Index Value Hedged USD. Pitchbook Private Capital Index includes private equity, venture capital, real estate, private credit and infrastructure. Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any specific investment. Index returns do not include any expenses, fees or sales charges, which would lower performance. Past performance is no guarantee of future results. Real results may vary. For risk assets, 2022was a tumultuousperiodand investors experienced the concurrent collapse of both equityand fixed incomemarkets. While the high correlationbetween equity and debtmarkets has declined in the first part of the year, 2023 continues to present significant stresses for investors. Macroeconomic uncertainty, regional banking failures, persistent inflation, peaking interest rates, recession fears and volatile public equityand debtmarkets are among the challenges that are unsettling investors and portfolios. However, we believe that this turmoil may lead to potential opportunities inprivate equity, real estate and hedge funds over the coming 12 to 24monthsas alternatives managers leverage their capital positions to take advantage of market volatility, dislocation and stressed situations. 1 Pitchbook, as of December 31, 2022 2 HFR, as of December 31, 2022 3 Bloomberg, as of December 31, 2022 OVERVIEW | WEALTHOUTLOOK 2023 | MID-YEAR EDITION │ ALTERNATIVE INVESTMENTS | 4 -20% -15% -10% -5% 0% 5% Pitchbook Private Capital Index HFRI Fund Weighted Composite Index Bloomberg Barclays Global Aggregate Total Return Index Value Hedged USD Bloomberg Barclays Global High Yield Total Return Index Value Hedged USD MSCI World TRNet Index (USD) S&P 500 (Total Return)