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The full impact of the COVID-19 crisis on alternative investments remains to be seen. The scope of displacement that businesses and investors will experience, as a result of the 2020 recession, looms large as governments and institutions begin reopening and the path forward comes into focus. The impact of vaccines and the extent to which our behavior will reconfigure as public sentiment gradually embraces “normality” remains unclear.
The definition of normality depends on human, public health, and economic forces, as explained in detail in Alternative Perspectives: Preparing for a Post Pandemic World from the Asset Management Division of Goldman Sachs. Sectors of focus include private equity, real estate, growth equity, and credit investment.
“Awaiting the surviving businesses on the other side will be...ultimately a restored economy in which consumer and business behavior is seriously reshaped by the scars of 2020.”
As part of that publication, the Goldman Sachs Alternatives Survey queried asset managers and asset owners worldwide in an effort to uncover how stakeholders are adapting to the current environment, and how their approach to future opportunities have changed.
What are Alternatives?
Alternatives are an asset class defined as any type of investment that isn’t a stock or bond. The most common alternative investments are real estate, commodities, private equity, and hedge funds. However, any market-based asset that isn't a security or credit bond qualifies as an “alternative” investment, even fine art or rare wine.
Respondents confirmed trends linked to the ongoing effort of reopening, supporting a broader picture of the global recovery. The survey illuminates sector performance as this unprecedented phase of the coronavirus pandemic continues to unfold.
Highlights from the report data:
It’s clear the COVID-19 crisis continues to impact the alternatives asset class, and the public health actions of individuals, governments, and businesses will shape the road ahead.
As reported in Alternative Perspectives, the factor perhaps most crucial to the next phase of recovery is the race to herd immunity. The pace and duration of reopening and the stability of the underlying economy may be linked to public vaccination sentiments and the success of programs instituted to enhance it.
“The critical element is time. Liquidity is not endless, and timing to uptake of an effective vaccine is key for market confidence...”
Other key areas of insight covered in the publication include:
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