For professional investors and qualified investors only

2024 ALTERNATIVES OUTLOOKThe coming year
could be aninflection point
Challenging periods can be the best time to invest inAlternatives. We explain why this is the case.
Stewart Bennett
Global Head of
Alternatives

Looking ahead to 2024, we think it could be an inflection point whereby
greater clarity on the macro-environment could provide conditions forthe coming period to be a great vintage. Investors might be able to takeadvantage of lower asset prices, balance sheet restructuring, distressed
asset sales and discounts in secondary markets.

After a challenging 2023, the coming year could prove very interesting
Alternative asset classes have not been immune to what has been going on
in capital markets throughout 2023, which have been influenced by a mix ofhigher interest rates, lower growth and greater volatility that has particularly
affected strategies that use leverage.

Issued December 2023

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2024 Macro outlook

Consequently, there has been a slowdown in activity:difficult exits, challenging fund raising, slow deployments
and tightening credit conditions. This has placed pressure
on pricing, especially in real estate, and instilled a cautious
mindset in the investor base.
Looking forward to 2024 there is a feeling that we have
hit peak interest rates. What is uncertain is the timetablefor future rate cuts – from here there will likely be somedifferentiation in central bank policies and economic outcome
return. The US Federal Reserve, for example, is likely to keepinterest rates higher for longer than the Bank of England,as the UK economy with its shorter-term mortgage lending
structure and greater overall vulnerability to higher rates,weakens sooner. We still expect interest rates to fall globally,
but the timing of what happens when will be different.
We expect that there will be some highly attractive investment
opportunities going forward. In fact, 2024 could offer up a

Issued December 2023

What it will take for Alternatives torecover is further re-pricing, morestability from a credit point of view
and a clearer macroeconomic picture

great environment once the factors we have mentioned becomeclearer. It is going to take a bit longer to get to that point, butwhen the time comes those investors on the side lines with dry
powder will benefit.

22024 Macro outlook

What it will take for Alternatives to recover is further repricing, more stability from a credit point of view and aclearer macroeconomic picture.

The case for investing in alternatives remains as strongas everThe arguments for why you should invest in alternatives
are well versed: diversification of risk, lower volatility,and potentially superior absolute returns over time. Bothinstitutional and retail investors should view alternatives
as a portfolio enhancer. Clearly, though, the record ofoutperformance has been challenged by high interest rates.
Fundraising has been difficult year-to-date, not least becausebond yields are now attractive. Over the medium to longterm, though, we strongly believe that structural tailwinds
will be present for Alternatives – whether real estate, private
equity, infrastructure or liquid alternatives. Add that to thereasons why 2024 may prove an inflection point, and there
is a good case to be made for investing in Alternatives.

1Alternatives at Columbia Threadneedle
The expected outlook for 2024 very much plays to thestrengths of Columbia Threadneedle Investments’ global,multi-faceted Alternatives business. There is a real depth
to our investment teams with capabilities spanning real
assets, private markets, and hedge fund capabilities. These
teams comprise around 140 investment professionals
overseeing in aggregate around $35 billion of assets undermanagement1, which serves our clients well.

Both institutional and retailinvestors should view alternatives
as a portfolio enhancer

 eal Estate Debt investments of $11.8 billion managed by the Columbia Threadneedle teams based in the US and the investment professionals associated with thoseRinvestments are not included in the Alternatives AUM and staff numbers. Additionally, the Global Absolute Return Strategy of $1.6 billion managed by Pyrford International, a UKbased investment management firm and a wholly owned subsidiary of Columbia Threadneedle Investments, and Pyrford’s investment professionals related to the strategy, are notincluded in the AUM and staff numbers. For transparency, the Alternatives AUM includes $0.6 million of ‘Other Alternative investments’ which cannot be listed separately as theycannot be attributed to the individual Alternatives teams.

Issued December 2023

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2024 Macro outlook

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