Private Markets Are Not as Opaque as They Seem
Private markets are often perceived by investors as an opaque area of the financial system. On one hand, private equity and private credit offer the allure of high returns relative to more traditional asset classes. On the other hand, their lack of liquidity and the infrequent performance data can make some investors sceptical of their potential. The papers that we have selected below aim to help professional investors demystify private markets and better understand the set of opportunities and risks that this exciting part of the financial markets can offer for their portfolios.
For compliance reasons, this paper is only accessible in the United States and Canada
As the world emerges from the coronavirus pandemic, investors are looking for opportunities across private equity markets. However, to tap into these opportunities, they have to carefully navigate a volatile environment with plenty of new risks.
For compliance reasons, this paper is only accessible in the United States
In 2022, alternative asset classes have attracted new interest from investors seeking to diversify their portfolios. Invesco's guide to private markets provides critical insights for investors who are in the process of tapping into alternatives.
Private equity offers attractive returns if the entire process of investing in the asset class is executed well. Brookfield shows that the first step – deciding where to invest – is crucial in this regard.
For compliance reasons, this paper is only accessible in certain geographies
As more money flows into private markets, the influx of liquidity needs to be put to good use. Integrated liquidity management is a process that focuses on how investors can set aside fund commitments without disrupting other parts of their portfolios.
There are several models for carrying out performance attribution on portfolios containing only liquid assets. However, it is more difficult to perform such an important calculation for private assets which are less liquid. CAIA walks investors through this process.
Researchers propose a novel way of measuring the valuation of private equity funds which suggests, amongst other things, that existing models' performance estimates may be questionable in a low discount rate environment.
Both the number of private equity funds and the amount allocated to the asset class have been growing in recent years. Importantly, research shows that this dynamic does not directly lead to lower or higher returns.
The private equity industry has embraced ESG, transforming these considerations into real value-driving forces for investors. The ESG trend is set to continue to grow in relevance in the years ahead.