Building A Private Markets Portfolio

Building a private markets portfolio is very different from building a public equity or fixed income portfolio.

Many of the portfolio management tools available across traditional asset classes are not readily available in private equity/debt portfolio management due to illiquidity both in terms of the nature of investment instruments and funds being closed-ended vehicles with capital subject to long lock-up periods. Additionally, access to the most sought-after managers is often constrained and data/reporting provided by private markets managers is not as transparent as that available within public markets.

PM Alpha's team has learned many lessons from working with a broad spectrum of investor types and sizes in the past. In our experience, investors improve their probability of successfully generating higher risk-adjusted returns by being cognisant of the fact that private markets portfolio construction should take into account a longer-term time horizon and more flexible internal governance with respect to self-imposed policies and constraints. Certainly, investment policies and governance are necessary to maintain a robust risk management framework and compliance with relevant regulatory requirements; however, they should be aligned with the investment objectives and time horizons of subject portfolios, whilst also incorporating an awareness of private markets dynamics.