Investing in Private Markets with Sinéad Rafferty
Understanding Private Markets
Transcript: Private markets have grown to over US$13tn in size, but what exactly are they? And what sets them apart? Private markets refer to non-publicly traded assets and offer a broad range of investment opportunities across private equity, private credit, real estate and infrastructure. Once only accessible to institutional investors, these opportunities are now increasingly available to individuals. While private markets come with challenges like longer investment horizons and less liquidity, they can be highly rewarding for those with the patience and insight to navigate them.
Why Investors Are Turning to Private Markets
Transcript: Stocks and bonds are becoming increasingly correlated leading investors to look for additional sources of diversification. Many companies are choosing to stay private for longer and regulatory change is reshaping banks’ risk- appetite, which has increased the investible universe for both private equity and private debt. Over the long term, private markets have typically provided high absolute returns, partly due to the illiquidity premium investors receive from committing their capital for longer periods. This combination of factors makes private markets an appealing option for those looking for additional layers of diversification in their portfolio.
Selecting Private Market Managers
Transcript: Given the plethora of private market managers entering the market today, investors need to do thorough due diligence when selecting who to invest with. Key considerations include assessing the manager's experience and their track record in navigating economic cycles. It’s also important to evaluate the scale and resources of the investment team as well as the risk management processes they have in place. Transparency of fees and governance are vital, as private markets are not as widely researched as public ones; look for managers who have deep experience in selecting, managing and divesting assets. Keeping these considerations in mind will enhance your ability to select the right private market managers and achieve successful investment outcomes.