2011 Market Preview

February 14, 2011

Overall, 2010 was a positive year for investors, as capital markets continued their upward swing and economic growth showed further signs of progress.

Most major stock indices (U.S. and non-U.S.) posted double-digit positive returns in 2010, with small caps generally outperforming large caps. The bond market benefited from another fall in interest rates, therefore delivering positive returns to all of the major indices, with sectors such as high yield and senior secured loans again recording the largest gains. Alternative asset classes had more of a mixed 2010: hedge funds disappointed, while real estate and private equity began to show signs of life. On the economic front, GDP growth continued its positive trend, while inflation remained low. Despite these facts, many questions still remain. Will the stock market experience a correction in 2011? What should we expect from alternative asset classes? Is inflation a threat to the economy? Will the unemployment rate improve?

In the following articles, we will take a closer look at each asset class, examining the major news items from 2010, as well as critical issues for 2011. Each article contains insightful analysis and key themes to monitor over the coming year, themes which will underlie the actual performance of the asset classes covered. Articles are offered for the following asset classes: fixed income, U.S. equities, non-U.S. equities, hedge funds, real estate, infrastructure, and private equity. As a launching point, we take a broad view of the economy and examine some crucial macroeconomic topics as they pertain to the U.S. economy.

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