GSAM: Sustainability remains top of mind

GSAM: Sustainability remains top of mind

30 november 2023

Alternatives Vooruitzichten
Outlook vooruitzicht (02)

The advent of AI holds the promise of productivity increases alongside reductions in low-value work, but sustainability remains top of mind.

‘Unprecedented events in recent years have forced investors to fundamentally rethink how they evaluate markets and build portfolios. Ongoing uncertainty and market headwinds have compelled investors, asset owners, and companies to redouble their efforts. And while today’s environment is unquestionably challenging, it also presents opportunities to reimagine the future through new technologies and approaches.’ Those are the main takeaways of Goldman Sachs Asset Management of its recent Alternatives Summit on how to adapt and grow within an ever-evolving investment landscape.

How long will they stay

‘Many long-held assumptions about markets, geopolitics, and investing have been tested in recent years. Across strategies, the consensus is that the macro environment is more important than ever, but uncertainty remains the only constant. The outlook for rates was again in focus this year, but the question has shifted from ‘How high can they go?’ to ‘How long will they stay here?’’

Value creation

‘With heightened market volatility and a higher cost of capital, the separation between winners and losers in the market has widened. During these periods of public market dislocations and re-ratings, active managers—which struggled amidst a prolonged period of low and falling rates—have more alpha potential. Private markets, however, have been more insulated. Amidst major structural changes, asset owners that were prudent in the past will be best positioned to capitalize on opportunities in the present. Dealmaking has slowed considerably, and more attention is being paid to fortifying current holdings and driving value through fundamentals. With tighter financial conditions, asset owners are forging deeper ties with existing lenders as well. Value creation has come to the forefront, but these initiatives take time, and many investors today need liquidity.’

Balance present with future

‘The pace of change has accelerated across many facets of life and is unlikely to reverse. The advent of AI holds the promise of productivity increases alongside reductions in low-value work—but it also presents challenges in preparing businesses and people for new realities. Sustainability remains top of mind for a multitude of reasons, particularly for real assets where resource requirements are often most intense. But it will take time for the transition to play out. As investors look ahead, however, it’s important to not lose sight of the present—a balance is needed between long-term strategic oversight and executing on day-to-day operations.’

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