Abraxas GAM, the New York and Hong Kong based provider of alternative asset management solutions, has reiterated that the large majority of its institutional client base believes that value throughout global equity markets has peaked as sentiment widely suggests that markets are overdue a sizeable and imminent correction.
After 2019 began with widespread selloff, markets again rallied with the S&P 500 index ending for the first half of 2019 17.4 percent up. Whilst the early correction was welcomed by some as needed, assets remain overvalued as the excessive effects of quantitate easing have indiscriminately inflated prices over the past decade.
“The state of the market continues to present investors with a series of challenges as they look to manage risk through turbulent conditions. Whilst equities have in large rewarded investors over the past 12 months, we believe that assessing portfolio allocations during this time should be a foremost concern as portfolios prepare for what is likely to be a volatile run towards the end of 2019,” commented Lex Anderson, senior market analyst, Abraxas Global Asset Management New York.
“Over the past 18 months, we have noticed a significant shift in institutional allocations as the majority of our clients have diversified their holdings into alternative positions, specifically through hedge fund placements and secondary market private transactions. We expect this pattern to gather momentum as the year continues to unfold,” continued Mr. Anderson.
With a number of high-profile political events set to unravel during the second half of 2019, analysts at Abraxas GAM believe that risk-adjusted measures should be taken through by increasing positions that are less correlated to equity market exposure.
“The repercussions on wider market performance as a result of the Brexit scenario remains highly unclear, and the ongoing trade war between China and the U.S. will demand a satisfactory conclusion in order to prop the U.S. economy as growth continues to slow, resulting in a limited upside in the stock market performance.”
As institutions and private investors explore the potential for an alternative risk profile, access to alternative assets has in recent years become more convenient as regulatory improvements and reporting standards have grown in line with demand. The continued shift towards alternative allocations can help to balance risk and protect capital during the onset of more difficult times.