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Trends Watch: Identifying Attractive Opportunities in an Uncertain Market

Dec 15, 2022

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Daniel Bakalarz, Co-CIO, Unison Asset Management.

What is your outlook for alternative investments?

We’re at an inflection point. It’s been nearly 15 years since the ten-year risk-free yield was trading above 4%. And the Fed seems poised to continue to raise rates until something breaks. This leads me to believe the next ten years will look meaningfully different than the preceding decade. Local and specific asset selection will contribute to returns much more than general and thematic asset class allocation. Alternative investments will continue to be an attractive home for capital. But I suspect this new macro paradigm will produce an environment that will favor managers with specialized knowledge.

Where do you see the greatest opportunities and why?

The good and/or bad thing about bear markets like the one we’re in is that risk-asset correlations go to one. Particularly in public markets, usually there's dispersion between sectors, industries, and specific stocks: A bad day for health care might be a good day for consumer discretionary; or a drawdown in equities can be offset by a rally in corporate or sovereign debt. But during the worst bear markets, nearly everything falls apart. You can think of this as a sign of panic selling, when fundamentally uncorrelated assets all underperform in unison. The greatest opportunities will come from indiscriminate selling of high-quality assets, which will inevitably lead to meaningful discounts in their offered prices as compared to their intrinsic values.

What are the greatest challenges you face and why?

The best time to raise capital is the worst time to invest it. And the worst time to raise is the best time to invest. We’re much closer to the latter part of this paradox than the former. As investment managers, our raison d’étre is to produce alpha. But we’re constantly fighting a confluence of external forces that seem to conspire against our ability to perform this duty.

What keeps you up at night?

Every event in the world affects some security price somewhere. It is incredibly intellectually stimulating to envision how the world will change over an economic cycle and the effects these changes will have on asset prices.

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.


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Elana Margulies-Snyderman

Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.

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