The private credit market has grown significantly in recent years, with both borrowers and lenders interested in the flexibility and customization of private transactions, especially as banks are constrained in their lending activities. In an environment of higher (albeit potentially moderating) interest rates, and in light of significant refinancing needs (Commercial Real Estate alone will see $1.5 trillion in debt mature by the end of 2025), private credit investing offers appealing opportunities.

We are moving back towards our Strategic targets by shifting a modest amount of cash/short-duration fixed income back up to U.S. Small Caps. We will remain slightly underweight Growth vs. Stability on the grounds of very weak forward return expectations for U.S. Large Caps and negative momentum in China. The U.S. economy is relatively well positioned for a potential soft landing in 2024. In the meantime, we are keeping a close eye on opportunities in distressed debt and private income as the year evolves.

This is a summary. Please contact your client advisor for the full Tactical Allocation Viewpoints report.