Following years of strong returns in traditional assets, we believe the forward-looking return expectations from these asset classes are low. Investors looking to meet their objectives need to reposition their portfolios for this new reality. Investing efficiently in private markets can be a tool that helps investors get from a good outcome to a potentially great one.
“Alpha from my listed equity investments can probably do the same job”
We believe diversifying the sources of returns to include illiquidity and greater skill can contribute to a more robust portfolio.
“The illiquidity worries me”
We believe illiquidity in private markets is typically overestimated. Even though lock-up terms are typically 10 years, cash flows are received throughout the term and the value remaining in a fund at year 10 is typically minimal. Furthermore, the significant growth of the secondary market has materially increased liquidity.
This is covered in more detail in the below paper, as well as how to build a high-conviction private markets portfolio and several case studies.
1 Preqin median private markets fund returns compared to listed equities (MSCI World), for vintages 2000 to 2017. 2018 to 2020 vintages are excluded due to immaturity of these investments. Data to June 2020. Past performance is not indicative of future results.
| Title | File Type | File Size |
|---|---|---|
| Private markets: A compelling returns story | 1.8 MB |
