3 things investors should keep in mind when eyeing opportunities in this asset class
Apollo Global Management’s Eric Hanno is seeing two major trends changing the structure of public markets.
One of these is the high level of concentration, with 34% of the S&P 500 represented by just 10 stocks trading at 40-50x P/E ratios. The second concern is indexation (and in turn, the rise of passive investing).
“Almost 60% of managed funds in public equity markets today are managed by index funds,” says Hanno.
It all means investors are rapidly having to find alternatives outside of the mainstream to drive returns and Hanno believes that private markets offer a fantastic opportunity.
“If you look at businesses with greater than $100 million in revenue, over 90% of them are private,” he says.
While private equity can be seen as a higher-risk option, Hanno believes that core private equity opportunities offer an attractive replacement for public equity holdings and even an alternative to traditional private equity.
Read the full aritcle on Livewire.