In public markets, whilst you get the benefits of liquidity, in many circumstances there is greater information available to investors in private markets. It will continue to be a growing asset class across equity and debt where we can help make investments that change people’s lives and communities for the better. Job: Also, as investors get more familiar with the asset class it will lose some of its mystique. While I do not see it becoming mainstream in the immediate future, it should continue to grow in institutional investors’ portfolios given, for example, its diversification benefits. Mattingly: The end user of our efforts, the member, wants ESG-orientated investments. They do not want that at the expense of returns, so we have a financial materiality duty.
There is another context in terms of pressure, not just from the government or the physical risks of climate change but mem- bers like the idea of their assets doing good.
Butani: While the outlook is strong there may be a few bumps in the road. It has been an exceptional decade, with low interest rates and inflation, economic growth and a healthy stock mar- ket, which has created capacity for greater allocations towards private markets. There have been incredibly loose monetary policy conditions as well. In the near term, there may be some turbulence but the overall outlook should be strong. The qual- ity of data metrics continues to improve, which will help inves- tors understand the role of private markets better and arguably make them stronger. Thirdly, if we had this conversation in three or four years’ time, will private wealth have a greater role in allocating capital to private markets? If you look at the trillions held in private wealth portfolios, just 1% of that would increase the size of the private markets by almost 10%. We are starting to see signs of the private markets industry democratising access to private wealth investors. Expect them to have a more visible presence at the table.
May 2022 portfolio institutional roundtable: Private markets
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