Why Private Markets?

PM Alpha
Oct 20
2 min read

In an environment where expectations for future returns across most asset classes are much lower than in the recent past, investors are increasingly turning to private markets to boost their expected portfolio returns. As a result, we have seen investors' private markets allocations steadily increasing year-on-year across both private debt and private equity. Many of these investors are making their first allocations to the asset class; lack of experience in this sphere leaves them prone to common portfolio construction mistakes (and associated risks) that seasoned private markets investors have learned to avoid.

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.

PM Alpha's goal is to provide unique insight to investors seeking private markets investments by leveraging our extensive experience servicing private wealth and asset managers. We aim to provide clients with access to historically less-known and exclusive private markets investment opportunities through our proprietary open-architecture digital platform. Our investment team has a proven track record in sourcing and delivering best-in-class investment products to investors, as well as aligning the interests of fund managers, distributors and wealth managers to reduce the costs, regulatory constraints and operational burden of accessing these investments. PM Alpha firmly believes that investors who maintain an open, forward-looking mindset and are not afraid to seek expertise from others increase their chances of success in this sphere.

Why Private Markets?