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Alternative Market Briefing

Investors try to carry on business as usual, but remain wary of virtual meetings

Thursday, June 18, 2020

Bailey McCann, Opalesque New York:

A new report from investment advisory firm Campbell Lutyens shows that investors are sticking with their current allocations to alternatives, but bringing on new manager relationships is proving difficult. 46% of investors wouldn't consider adding a new manager without an in-person meeting, which is next to impossible to pull off in quarantine.

The report includes responses from 300 LPs.

Why is the in-person meeting so important? Investors say that they want to be able to do onsite diligence and that Zoom calls don't provide the whole picture. As a result, many investors are taking a wait and see attitude over the near term. They're willing to skip new allocations for a few months and use the time to think through how diligence will work if the onsite meeting becomes a thing of the past.

Apart from new manager commitments, investors are more or less carrying on. Data in the report shows that portfolio allocations are relatively stable and that investor concerns around liquidity have subsided. Worry peaked during the onslaught of the bear market in March, but as markets have rebounded so too has investor confidence. 74% of investors are now confident about liquidity, compared with 39% in March.

Looking ahead, liquidity issues could arise if marks on private funds fall below where they were in Q1 as a result of the recession or a second wave of the pandemic. Data in the report shows that capital calls have outp......................

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