Q1 2018 – Quarterly Investment Letter

Global growth momentum to accelerate and to slightly surpass pace of 2017 of 3.6% (estimate) GDP growth.

U.S. tax cuts might add up to 0.5% of U.S. GDP growth. China’s GDP growth is expected to soften towards 6.5% while reforms will continue.

Stay pro-risk but get ready to turn more cautious as the year unfolds. Surging U.S. inflation and high asset valuations represent the greatest risks to our positive risk scenario.

All traditional asset classes trade at expensive valuations. On a risk-/return outlook perspective, equities look the most attractive, but more volatility needs to be incorporated heading into 2018.

European and Emerging Market equities provide better value than U.S. equities, especially in small to mid-cap names. Favour (consider) active managers at this later cycle market, especially when investing in small and mid-caps. Equity long short strategies and hedge funds in general are beneficiaries when volatility and dispersion are expected to rise (especially if supported by higher trending markets).

Keep duration low and stay away from Government bonds and high quality investment grade bonds until UST 10 year bonds trade around 3%. We expect U.S. High Yield and Loan defaults to remain depressed in 2018. Harvest illiquidity premium whenever possible. Favour Emerging Market Local Currency over Hard Currency bonds.

Full Quarterly Investment Letter Q1 2018

Alpinum Quarterly Investment Letter
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