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Alternative Market Briefing

Investors increase allocation to private markets during turbulent times

Monday, June 28, 2021

Laxman Pai, Opalesque Asia:

Increasing capital flows into private markets -private equity, private debt, real estate, absolute return, infrastructure, and GP stakes - have led to rapid growth in assets under management of private markets and broadened the investor base within this segment, said a study.

According to a new report by Investcorp, private markets benefitted from increasing inflows last year after traditional asset classes were beset with challenges such as historic lows in fixed-income yields and a volatile equities market.

"During a turbulent 2020, when traditional asset classes faced several challenges, such as historic lows in fixed-income yields and a volatile equities market, capital continued to shift towards private markets," it said.

Investor appetite has been influenced by factors such as active management approaches and longer investment horizons that offer the ability to navigate short-term pressures that can distort investment decisions in public markets.

Additional influencing factors include excess returns, diversification benefits, improved risk-return profiles, and exposure to societal megatrends such as aging populations, ESG, AI, climate change, and the redefinition of global trade that underpin private markets.

Capital flows into private markets asset classes have driven rapid AUM growth of private markets relative to public markets and the investor base has broadened to include institutional and private investors.

Manage......................

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