The Fill: January 2024

A letter from our CEO

Happy New Year. I hope you enjoyed a restful holiday season. As we begin 2024, I’d like to take the opportunity to reflect on 2023 and share our outlook for the year ahead.

2023 proved to be a momentous year for FS Investments and our clients. Most significantly, we completed our acquisition of Portfolio Advisors, adding a suite of private equity and secondaries strategies to FS Investments' primarily credit-focused fund offerings.

We now manage more than $76 billion globally and have investment teams focused on nearly all corners of the private markets. The breadth and depth of our relationships with fund managers, portfolio companies, bankers, institutional investors, wirehouse platforms and advisors provide us a broad perspective on market dynamics, investor appetite and future opportunities. As always, we look forward to continuing to share insights and expertise with our clients through our comprehensive education platform, which includes a robust team of client service professionals, extensive market research, expert-led webinars, the FS Investments FireSide podcast and FS Thrive value-add programs.

2023 also proved to be a slow year in the private markets. High interest rates and a muted IPO market dampened both deal activity and investment exits. Private equity deal activity was down approximately 40% from 2022, which saw significantly lower deal volume than 2021. The decline was most prominent in the third quarter, when exits reached their second-lowest point in the last decade. The real estate market also faced well-documented challenges, limiting transaction volume and placing downward pressure on valuations. And while private credit generally performed well in the high interest rate environment, originations were sharply lower.

While some of these dynamics will persist in 2024, we see opportunity and reason for optimism. At the moment, the secondaries market is ripe with compelling opportunities as both GPs and LPs look to sell their investment stakes and create liquidity. If the interest rate environment improves, deal volume should ramp up, relieving the pressure on fund managers to exit investments and return capital. And finally, the year will surely be filled with market-moving macroeconomic developments. In what is being called the biggest global election year in history, more than 60 countries, including seven of the?10 most populous, will go to the polls. Meanwhile, the world and the financial markets will closely follow ongoing geopolitical developments in Asia, the Middle East and Eastern Europe. Perhaps more than ever, this complex environment places a premium on our global private markets insight to drive investment performance and provide our clients with the information they need to succeed.

Recognizing the competitive and dynamic industry we are in, we know we must keep growing, innovating and evolving to better serve our clients. In 2024, we will be in-market with several flagship institutional offerings as well as a full slate of evergreen solutions in the wealth management channels. We enter the year energized, optimistic and focused on providing our clients a broader suite of differentiated solutions while continuing to be a leader in alternative education. I look forward to the year ahead and thank you for your continued partnership.

—?Michael Forman, Chairman + CEO

Get filled in on...

Lara Rhame’s 10 for ’24

Chief U.S. Economist Lara Rhame offers “10 for '24”—her predictions for the?10 essential trends in markets, policy and the economy for the new year. Read the chartbook , then listen to the podcast as Lara joins Director, Research Andrew Korz to review last year’s predictions and dive into her outlook for 2024.

Time to start rotating out of cash and T-bills? The?time for the right alts is still now

Read a new strategy note from Chief Market Strategist Troy Gayeski on where various alternative investments strategies fit into the potential macro environments investors may see in 2024.

The latest from our research experts

We examine how multi-strategy alternatives may improve a portfolio’s risk-adjusted returns in Charted territory: Multi-strategy alternative investing . And, the Investment Research team updates their views on the commercial real estate (CRE) market heading into 2024 with Charted territory: Anatomy of a CRE correction .

FS Thrive x Ace Quintana: Mapping career?growth

In the latest episode of the FS Thrive podcast, Ace Quintana, Head of Organizational & Leadership Development at FS Investments shares how to set effective career goals, make the most of employee reviews and mobilize tools like the Predictive Index (PI) to optimize performance.

3D Report: Q4 2023 Recap—The economy has to?normalize

In a new episode of 3D Report, Chief Investment Officer Ryan Caldwell and Chief U.S. Economist Lara Rhame examine the yield curve, household spending, movements in Washington and more to tell us what investors may see in Q1 and beyond.

FS Investments in the media

Lara Rhame at Schwab IMPACT: You want to be diversified

Chief U.S. Economist Lara Rhame joined Keith Black , Managing Director of RIA Channel, at Schwab IMPACT to discuss potential challenges to stock and bond markets. She outlined how impending headwinds may spotlight opportunities in private equity and CRE.

Troy Gayeski on Fox Business: A meteoric rally

Chief Market Strategist Troy Gayeski joined Fox Business to discuss whether 2023’s incredible rally could continue into the new year. He addressed the likelihood of a soft landing, the implications of gains driven by the “Magnificent Seven” stocks and the importance of embracing strategies that may mitigate downside risk.

Fulfilling acts

FS Investments Holiday Gift Drive

We celebrated the season with one of our favorite traditions, the annual FS Investments Holiday Gift Drive. Colleagues in Philadelphia, Orlando, New York and at Portfolio Advisors partnered with programs including Volunteers of America Delaware Valley, One Heart, LSA Family Health Service and Boys & Girls Club of Stamford to fulfill wish lists, wrap gifts and deliver presents to families in need.

Invest in Yourself: Financial Literacy?Workshop

The FS Women’s Network hosted a Financial Literacy Workshop for FS Investments colleagues on key topics including planning for retirement and large life events. The lively, informative discussion was led by Karen Robbins, Certified Investment Management Analyst and Senior Vice President of Wealth Management at UBS.

Values in Action: LSA Family Health Service after-school program

Colleagues from FS Investments and Portfolio Advisors partnered with Little Sisters of the Assumption (LSA) Family Health Service in East Harlem, New York, to support their after-school enrichment program. Volunteers provided one-on-one tutoring and homework help to students in kindergarten through fifth grade—and afterwards got to play some educational games!

FourBlock Career Readiness Event

Our volunteers partnered with groundbreaking nonprofit FourBlock to offer a career readiness event for veterans. This career-coaching session was organized by FS Heroes, the FS Investments Employee Resource Group that serves our growing network of military service members and the veteran community at large.

Awards and recognition

Michael Forman honored on “Philadelphia Citizens of the Year” and “150 Most Influential Philadelphians” lists

Chairman and CEO Michael Forman was honored as one of the Citizens of the Year ?by The Philadelphia Citizen for his work co-chairing the Philadelphia Equity Alliance. He was also named one of the 150 Most Influential Philadelphians ?by "Philadelphia Magazine," citing his achievements and innovations in investing, business, philanthropy, community building, arts and education.

Lisa Detwiler named “Fifty Over 50”

Managing Director and General Counsel Lisa Detwiler was named to City & State Pennsylvania Fifty Over 50 .?The list honors the commonwealth’s most influential change-makers, highlighting careers exemplifying professionalism, relationship-building, civic responsibility and vision.

Weekly fill’er up

The FireSide podcast : Tap into unconventional perspectives from our very own thought leaders and research experts.

Chart of the week : A collection of charts published each week using economic data to address timely market topics.

Market minute : Start receiving a weekly analysis from our Investment Research team.

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