2022 Mid-year Global Investment Outlook

We are pleased to present our first-ever mid-year investment outlook for 2022. This report includes our macroeconomic views for the rest of the year, as well as our expectations for public and private fixed income, real estate, infrastructure, insurance asset management, and retirement plan solutions.

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What’s covered

Our investment professionals across SLC Management, BentallGreenOak, InfraRed, and Crescent Capital are specialists in their respective asset classes, and are uniquely qualified to provide specific, actionable insights across this diverse range of traditional and alternative investments. In the Investment Outlook, we reflect on what surprised us so far in 2022 and what clients and consultants should be thinking about during the rest of the year ahead.

A letter from Steve Peacher

Macroeconomic outlook:

Inflation and geopolitical unrest are having a domino effect across global economies. The onus is on central banks across the globe to deliver a soft landing.

Fixed income: investment grade:

Fed tightening will likely have a broad impact across fixed income markets. Investors must be prepared for higher rates to weather the cycle.

Fixed income: below investment grade:

Interest rate hikes prompted inflows into floating rate bank loans and significant outflows from fixed rate high yield bonds. While credit fundamentals are strong, the risk of continued geopolitical unrest and potential central bank missteps remain key risks.

Private credit: investment grade:

Investment grade private credit continues to see inflows despite economic uncertainty. A shift in investor profile has impacted the types of deals and access available to investors, but unique opportunities are expected throughout the balance of the year.

Private credit: below investment grade:

Well-sourced and vetted private credit opportunities remain an attractive investment.

Real estate:

While economic conditions are providing continued support in the rental market, challenges persist in office space. There is a steady recovery in retail real estate and a boon in industrial real estate as well.

Infrastructure:

Demand for infrastructure investments will likely increase, across both traditional and non-traditional projects, but investors should be aware of supply chain constraints.

Insurance asset management:

Insurance company portfolios have taken a hit on both sides of their balance sheets due to high inflation and rising interest rates so far in 2022. Higher reinvestment yields, a comeback for tax-exempt municipal bonds, and opportunities in alternatives can provide a silver lining for investors.

Retirement plan solutions:

Amid market volatility, pension plan sponsors are seeing their funded status climb. It will be important to revisit de-risking strategies and review opportunities to incorporate higher yielding alternatives.

Steve Peacher
President
SLC Management

“ … As Einstein once wrote, “In the midst of every crisis, lies great opportunity.” We believe this sentiment is particularly true for investors who are willing to adhere to a disciplined, long-term investment strategy. Over time, financial markets tend to reward investors who can endure unexpected periods of volatility and remain committed to their financial objectives. Our role as an investment manager is to walk that sometimes challenging path with you, and to offer as much guidance and insight as we can along the way. …”