Wealth Outlook 2024 - Slow then grow

Glossary 133 debt from seven different local currency markets. The composite includes investment-grade (IG) corporate bonds from the DM issuers. Global DM equity is composed of MSCI indices captur- ing large, mid- and small cap representation across nine individual DM countries as weighted by the market cap- italization of these countries. The composite covers ap- proximately 95% of the free float–adjusted market capi- talization in each country. Global DM IG fixed income is composed of Bloomberg in- dices capturing IGdebt fromseven different local currency markets. The composite includes fixed-rate Treasury, gov- ernment-related, and IG corporate and securitized bonds from the DM issuers. Local market indices for the US, UK and Japan are used for supplemental historical data. Global emerging markets (EM) equity is composed of MSCI indices capturing large and mid-cap representa- tion across 20 individual EM countries. The composite covers approximately 85%of the free float–adjustedmar- ket capitalization in each country. For the purposes of supplementing long-term historical data, local-market country indices are used wherever applicable. Global EM fixed income is composed of Bloomberg indi- cesmeasuring the performance of fixed and floating-rate, USD-denominated EM sovereign debt for three different regions: Latin America; Europe, Middle East and Africa (EMEA); and Asia. Global EM local currency fixed income , specifically the Bloomberg Emerging Markets Local Currency Govern- ment Index, is a flagship index that measures the perfor- mance of EMdebt denominated in the local currencies (as opposed to in foreign currencies, such as US dollars – see “USD-denominated EM fixed income, ” below). Classi- fication as an EM is rules-based and reviewed annual- ly. Sometimes the term “unhedged” is used (as in “local currency fixed income unhedged”) to clarify that absent other modifications the exposure comes with potential upside and downside risk from repatriating returns into one’s native currency. An investor then may (or may not, depending on one’s confidence about the potential up- side) deploy an FX hedging overlay to help neutralize the currency risk. Global high-yield fixed income is composed of Bloomberg indices measuring the noninvestment-grade, fixed-rate corporate bonds denominated in USD, British pounds, and euros. Securities are classified as high yield if themiddle rating of Moody’s, Fitch and S&P is Ba1/BB+/ BB+or below, excluding EMdebt. The IbbotsonHighYield Index – a broad high-yield index including bonds across the maturity spectrumwithin the BB-B rated credit qual- ity spectrum included in the below-investment-grade universe—is used for supplemental historical data. Hedge funds are composed of alternative investment managers employing different investment styles as char- acterizedby different subcategories. Some tend to involve the use of leverage (and therefore also the potential for asymmetric losses) and lower liquidity, along with some combination of greater diversification and the potential for enhanced returns. The subcategories include vari- ous components of the HFRI Fund Weighted Composite Index: HFRI Equity Long/Short (positions both long and short in primarily equity and equity derivative securities); HFRI Credit (positions in corporate fixed-income securi- ties); HFRI Event Driven (positions in companies current- ly or prospectively involved in a wide variety of corporate transactions); HFRI Relative Value (positions based on a valuation discrepancy between multiple securities); HFRI Multi-Strategy (positions based on realization of a spread between related yield instruments); HFRI Macro (positions based on movements in underlying economic variables and their impact on different markets); Barclays Trader CTA Index (the composite performance of estab- lished programs, such as Commodity Trading Advisors, with more than four years of performance history). General partner (GP) stakes funds are a type of alterna- tive investment that seeks to acquire minority interests in private equity managers. In contrast to a standard private equity fund’s company investments, a GP stake fund’s investments in underlying investment managers typi- cally provides return from three distinct sources: man- agement fees, balance sheet and carried interest. These investments typically provide exposure to all the funds managed by the manager, as well as any future funds to be raised. Municipal bonds or “munis” is debt issued by state and local governments to help fund capital projects. From an Wealth Outlook 2024