Trt into alts lite edition sept

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The Red Thread Our semi-annual lite insights into alternatives Edition September 2026

The investment environment in 2026 continues to be shaped by geopolitical uncertainty, evolving inflation dynamics and the accelerating impact of artificial intelligence (AI). Renewed tensions in the Middle East have reintroduced inflation risks through higher energy prices, while AI-related spending is creating upward pressure on inflation in some sectors. As a result, central banks are expected to maintain restrictive policy settings for longer than previously anticipated.

Against this backdrop, global real estate investment activity softened, although signs of capital value recovery have emerged in markets where income fundamentals remain resilient. Switzerland continues to stand out, supported by low inflation, strong investor demand and resilient residential and commercial market fundamentals.

AI remains a dominant theme across private markets. In infrastructure, demand for data centers and power generation assets continues to rise as increasingly complex large language models require greater computing capacity, creating attractive investment opportunities.

Private equity is benefiting from stable portfolio company performance, healthy M&A activity and supportive valuations. However, higher interest rates continue to weigh on exit activity and AI disruption is also becoming an increasingly important consideration across sectors.

Within private credit, both direct lending and asset-based finance delivered constructive performance, while credit fundamentals remained broadly stable.

Hedge funds continue to benefit from elevated dispersion driven by uncertainty around inflation, interest rates and AI, creating opportunities across equity long/short, trading and event-driven strategies.

Overall, resilient market fundamentals and continued AI-driven investment continue to support alternatives markets, although geopolitical developments, inflation risks and higher-for-longer rates warrant continued selectivity.