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Bailey McCann, Opalesque New York:

Financial markets are going through some growing pains as they adjust to a new market regime that includes higher interest rates, higher inflation and more volatility. Against this backdrop, asset managers will have to find new ways of driving value according to a recent outlook from Partners Group.

"In this new regime, investors can no longer solely rely on high levels of real growth or low interest rates to drive returns. For private markets, this shift emphasizes the importance of value creation through asset transformation and identifying investment themes supported by long-term secular trends," the outlook says.

Partners expects higher nominal economic growth across most major economies except China, a trend which could persist over the next five years. That trend could be impacted however by growing macroeconomic isolationism or other inflationary policies pursued by the incoming Trump administration or in Europe. If these policies trigger supply shocks inflation could come roaring back. Partners says that regional economic differences are likely to be highlighted over this period and could create unique dynamics for active managers.

Economic policies aren't the only ones that could have an impact. "The rising political polarization is likely to drive regulatory changes and shift fiscal priorities," the outlook says. "As such, we closely monitor regulatory developments and are watchful of the reliance on governments'......................

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