BSD Investing’s Post

What's coming next for Private Assets Markets? How to paint a more complete picture of today's investment landscape, and provide a better sense of where markets may be heading? Underpinned by data from PitchBook, a leading provider of private-market data and research and an independent subsidiary of Morningstar, the Morningstar® PitchBook® Global Unicorn Indexes: "Harnessing Unicorns: Demystifying the venture capital market" provide insight into what's happening just over the horizon of the public markets in the late-stage VC market. #privateassets #privateequity #unicorns #vc #assetmanagement Morningstar Indices Fabio Peyer Ron Zeitoun BSD Investing L'ALLOCATAIRE Marlene Hassine Konqui Ahmed Khelifa, CFA https://lnkd.in/e-i7TCzE

Global Fund Performance Report (with preliminary Q1 2024 data) PitchBook 🔼 Strong 2023 Performance: Global private equity and venture capital funds showed robust performance in 2023, driven by significant gains in public equity markets and improved exit environments. 🔼 Shift in Investment Focus: There is a notable shift towards later-stage investments and growth equity, as investors seek more stability and higher returns amidst ongoing market volatility. 🔼 Preliminary 2024 Data: Early data for Q1 2024 suggests continued positive performance trends, with a potential increase in fund raising and deal-making activity, though market uncertainties may still pose risks. source: https://lnkd.in/eW6zN36V #VentureCapital #investing #Startup #AI #Data

Enhanced returns are not the only reason many investors are driven towards the #AlternativeInvesting space. By leveraging our strategic partnerships, here at Quant Capital Markets, we assist in identifying well-researched #InvestmentStrategies, opportunities and ideas across the #PrivatePlacement, #PrivateEquity and #VentureCapital arena. Quant Capital Markets | Your Trusted Partner | https://lnkd.in/d5UK84h | 020 3950 7343 | info@quantplus.co.uk #AlternativeInvestments #Investments #Wealth #WealthCreation #SeekingAlpha #Alpha #QuantCapitalMarkets https://lnkd.in/d7f6Gg3m

The need for greater transparency in alternatives continues to grow as the number of fund managers and investor types, notably individuals through private wealth channels, balloons. With the industry set to be worth $24.5 trillion by 2028, and more stakeholders needing greater clarity on performance data, customizable benchmarks will be integral to building a transparent alternatives industry, writes our Head of Benchmarks, Fabien Chen, for Institutional Investor. Fabien notes, "We believe benchmarks empower investors, fund managers, and advisors to make data-driven decisions and rely less on assumptions. Robust benchmarks are crucial for ensuring market participants speak the same language, fostering informed decision-making and stakeholder trust". Read more about the importance of building trust and clarity through benchmarks here: https://okt.to/r4ODeo #benchmarks #alternatives #privatemarkets

Despite trading at very low valuations by historical standards, European small & micro caps have only partially contributed to the market rally in 2023. Fortunately, a number of factors could act as catalysts to rekindle investor interest. #SmallCaps #PrivateEquity #ValueInvesting #ConstructiveEngagement https://lnkd.in/eVGX8hKR

In 2024, private asset strategies may present interesting opportunities to tap into appealing long-term investments while continuing to afford access to some of the most innovative companies before they are listed publicly. Sagging valuations could mean that this year turns out to be a good ‘vintage’ (the year a fund starts making investments) for both private credit and private equity funds. We are now in a new era – one in which persistently high inflation is keeping rates high, and in which geopolitics and other macro concerns are weighing on deal appetite. The message from this new era is that investors must be more selective and managers must add value in different ways. And if the new era is relatively short lived and the market improves, they should truly excel !

Insight’s Shantanu Tandon, CFA, portfolio manager, multi-asset strategy team, said: "Aggregate investor positioning and risk sentiment has reduced since the beginning of 2024. This has coincided with recent geopolitical tensions in the Middle East, a reappraisal of the inflation outlook and monetary policy implications, and rising bond yields. We see the potential for risk appetite to return if some of these risks were to abate in the near term." Click here to see our chart of the week: https://bit.ly/4b9z354 Capital at risk. For professional investors only.

Once again, high yield markets delivered positive returns through the rate-hiking cycle. Interestingly “fallen angels” (companies with former investment grade bond ratings that have since been downgraded to high yield), performed better than the broad high yield market despite higher average interest rate risk. Should investors looking for higher bond yields consider a dedicated fallen angels strategy? Read more here: https://bit.ly/3X6gNFF

Credit to the Substantive Research Ltd team and Mike Carrodus for bringing these insights to the forefront. I have always maintained even before the MiFID II research payment rules came into effect that the regime contained within it a high risk of unintended consequences and that the changes were akin to "shooting the messenger". The reactions we have so far are initial inertia to make any fundamental changes, and any hybrid model further confuses the market and the various stakeholders (not to mention another round of tech and admin changes!). If one takes a 3 to 5-year view, I believe, the market will move closer to the US marketplace for research and related services, where client commissions will pay for such expenses, perhaps under a more elaborate commission-sharing arrangement (CSA) regime. #MiFIDII #equityresearch #esma #fca

𝐕𝐞𝐧𝐭𝐮𝐫𝐞 𝐂𝐚𝐩𝐢𝐭𝐚𝐥: 𝐎𝐧𝐥𝐲 𝐔𝐩𝐩𝐞𝐫 𝐐𝐮𝐚𝐫𝐭𝐢𝐥𝐞 𝐅𝐮𝐧𝐝𝐬 𝐇𝐚𝐯𝐞 𝐑𝐞𝐭𝐮𝐫𝐧𝐞𝐝 >2𝐱 𝐅𝐨𝐫 𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬 The most recent UK Venture Capital Financial Returns report provides a comprehensive performance analysis of VC funds. The report mainly focuses on the UK's VC ecosystem, while also covering Europe and the US. Authors have amassed a large amount of data from commercial data providers (Pitchbook, Preqin), fund managers, and their alternative investments. One key metric is distributions to investors relative to their invested capital, or DPI. It shows the multiple of invested capital already distributed to funds' investors. The data covers vintages (2002-2015) that had sufficient time to reach maturity and realize investments (VC funds usually have a lifetime of 10-12 years). Insights from the DPI distribution graph: 🔹Power law distribution of DPI multiples 🔹Distribution of DPIs is similar for all analyzed regions: US, UK, and Europe (lags below top decile). 🔹Median return is clustered around 1x. 🔹Upper quartile (top 25% of all VC funds) has returned less than 2x of invested capital (or around 9.5% p.a.) 🔹Upper decile (top 10%) has less than 3x DPI ratio (or around 15.5% p.a.) Of course, DPI does not show everything and there might be some remaining portfolio companies to be realized that could bring the total return higher. Even so, playing against the house or power law is complicated. Investors must either get access to top managers, try selecting the next best emerging managers, or go for an asset class with a more promising return distribution.  Source: British Business Bank // #AssetAllocation #VentureCapital #AssetAllocation