from managers that some of the larger transactions in their pipeline have stalled in terms of their execution. Uncertainty tends to make people pause and take stock. But I agree with Christian that the direct impact on portfolios today is minimal. It is the second-order impacts that will take time to filter through and hit portfolios. Sumpster: The war in Ukraine has accelerated peoples’ focus on having secure sources of energy to rely on. In the UK, nuclear will come more onto the agenda in the near future and there will be further investment in renewables. Certainly, across Europe we will see the renewables agenda accelerate. Inflationary pressures and the cost of living could potentially lead to recessionary concerns. Constantly reviewing portfolios will be required. Investing in index-linked debt in utilities may give rise to some inflation protection. Equally, review your exposure to sectors which are more susceptible to a recession. Butani: Any decision around inflation needs to include interest rates. You could argue that monetary policy has been too loose for too long.


There are two ways you can look at this. Are policymakers going to continue holding their nerve or do they need to start putting rates up because inflation is too high? In most devel- oped economies we are already on an upward trajectory. What does that mean for mortgages and discretionary spend? Will there be a knock-on effect? There is an added layer of nuance and uncertainty which may make investors watch and wait when it comes to executing deals.


What are the supply and demand metrics like in private debt? Humphreys: We publish a dashboard twice a year. We have talked about liquidity and it being easier in public markets, but we would say that it is comparable to where it has been in the recent past in the margins you are getting over the public equivalents. We do not see overheating in private credit. In private equity you have to be more discerning, but the margins in private debt, relative to the forward-looking terms of developed market sov- ereign bonds and investment-grade credit, are fairly robust.


What is your outlook for the private markets? Mattingly: There will be exponential growth. The hurdles to overcome from a trustee governance perspective are under- standing – especially where you have non-professional trustees – fees and charge cap tensions. The contexts of this are government policy, the desire for con- solidation, the desire to diversify and the desire to get more involved in ESG underlying assets, which all create potential exponential growth over the next three to five years. Aylott: Private markets have demonstrated over decades that they can produce outsized returns. That has been through


22 May 2022 portfolio institutional roundtable: Private markets People want liquidity, but they


may not necessarily need it. Joanne Job, MJ Hudson


periods of multiple corrections and dislocations in the market, so this is not any different.


The market is continuing to grow and expand. The types of strategies investors can access is growing. I do not see that changing. In fact, times of dislocation often create oppor- tunities. Technology will increasingly play a role. It is more horizontal than vertical in terms of it touching every sec- tor. It will continue to be part of the solution, so I see it growing and the opportunity set being there. Returns have demonstrated over time to be strong if done correctly, which is key. Sumpster: There are exciting times ahead. Private markets will continue to grow and the investment opportunities will diver- sify further. Attractive returns continue to be seen. But what we are gaining as the asset class emerges is greater transparency. The better your understanding of your investments, the more you can relate your brand to certain investment strategies.


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