Wealth Outlook 2024 - Slow then grow

132 Glossary Asset Class Definitions: Bank loans is a generic term referring to commercial or real estate loans underwritten and sourced by banks and other regulated depository institutions. Banks may either retain the loans on their own balance sheets or as often occurs, package a portfolio of loans to securitize to insti- tutional investors while retaining the servicing of the loan for a fee. Also commonly known as “leveraged loans,” a reference to the relatively high level of debt carried by the borrowers compared to investment-grade-rated seg- ments of the debt markets. (See “Morningstar LSTA US Leveraged Loan 100 Index,” below.) Cash also includes “cash equivalents” such as money market funds, CDs, and short-term Treasury bills beyond fully fungible cash sitting in a savings or checking ac- count. While this asset class is considered very low risk (since the chances of losing one’s money are practically nil), it does come with an opportunity cost and the risk that its value could be eroded by inflation over time. Cash in the US is represented by the three-month government bond Treasury rate, measuring the US dollar (USD)-de- nominated active three-month fixed-rate, nominal (i.e., non-inflation-adjusted) debt issued by the US Treasury. Commodities are an asset class containing the index composites – GSCI Precious Metals Index, GSCI Energy Index, GSCI Industrial Metals Index and GSCI Agricultural Index – measuring investment performance in different markets, namely precious metals (e.g., gold, silver), en- ergy (e.g., oil, coal), industrial metals (e.g., copper, iron ore) and agricultural (i.e., soy, coffee), respectively. The Reuters/Jeffries CRB Spot Price Index and the TR/CC CRB Excess Return Index, an arithmetic average of commod- ity futures prices with monthly rebalancing, are used for supplemental historical data. Diversifying funds are alternatives funds that are typi- cally expected to display low and often negative correla- tion and/or beta to traditional risk asset classes such as equities over an investment cycle (though some funds in this category may display variable degrees of market correlation at certain points of the cycle). Such funds are designed to perform better during periods of high market volatility and generally may provide attractive diversifica- tion benefits to a client’s portfolio, although returns may vary between gains and losses and can be volatile during any given period. This internal classification is based on the analysis and subjective views of CGW Alternatives. The internal classification is subject to change without notice to investors and there is no guarantee that the funds will perform as described above. It is important to note that the market strategy described above will not completely eliminate market risk. There is no guarantee that alternatives funds classified as “Diversifying” will perform as described above. Alternatives funds should not be invested in based on their classification as “Di- versifying” and other assets in a client’s overall portfolio should be taken into consideration before an investment is made. Directional funds are alternatives funds expected to dis- play moderate to high positive correlation and/or beta to traditional risk asset classes such as equities over an investment cycle (though some funds in this category may display variable levels of correlation at certain points of the cycle). Such funds often invest with a (sometimes significant) net-long bias, and because of this may also carry a higher level of risk . This internal classification is based on the analysis and subjective views of CGW-Al- ternatives. The internal classification is subject to change without notice to investors and there is no guarantee that the funds will perform as described above. It is import- ant to note that the market strategy described above will not completely eliminate market risk. There is no guaran- tee that alternatives funds classified as “Directional” will perform as described above. Alternatives funds should not be invested in based on their classifications as “Di- rectional” and other assets in a client’s overall portfolio should be taken into consideration before an investment is made. Global developedmarket (DM) corporate fixed incom e is composed of Bloomberg indices capturing investment Wealth Outlook 2024